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Level 5

Student loans and credit score

Hello, I’m wondering if it is better to pay off a large sum of the student loan or to pay off smaller amounts per month? Which option will be better for building credit?
2 Replies
Level 14

Student loans and credit score

If you can afford it next to pay down the student loan to eliminate the interest

What is your credit score now? Hard to answer the building credit question otherwise
Level 20

Student loans and credit score

Your score is determined in part by your on-time payment history.  If this is your only long-term debt, I suggest making at least the required monthly payment, or more, for at least two years before paying it off.  If you have other debts that you pay monthly on time that show up on your credit report, go ahead and pay off the student loan.  Or, if you have a history of on-time payments with the student loan but some late payments on other debts, keep the student loan current for awhile.


The other factor in your credit is your debt to income ratio, and your debt to credit ratio.  Making a larger lump sum payment on the student loan will improve both of these numbers, so if you have other debts with an on-time payment history, go ahead and pay off the student loan.


And of course, its usually a good idea to pay off your debt with the highest interest rate first, if you have more than one outstanding loan.