Will slowing down my loan payments help my credit?
November 9, 2012 4:07 PM Subscribe
The only loans I have are student loans, which I'm working hard to pay off. Would it be better for my credit score if I stopped paying them down when they reach $5.00 and then just pay interest from then on?
posted by brenton to Work & Money (18 answers total) 1 user marked this as a favorite
I'm living frugally and putting every extra cent I make into my loans: I'm looking at paying them off in 2-3 years. But I know that it improves credit scores to have a long history of on-time payments made. I'm not the sort of guy to take out a loan when purchasing a car though, so student loans will probably be the last loans I have before I buy a house.
I think I might have a minimum payment amount regardless of the amount left, but say for one of them the minumum is $100/month. If I pay it down to $1000 and I have $1000 in my pocket, is it better to pay that off immediately, or slowly pay it down over 11 months?
I'm aware that I'll be incurring interest, but I have the feeling that the extra interest paid will be small compared to the benefit of better credit when purchasing a house.
Another question: since I have multiple loans, is it better to pay them all off at the same time, or is it better to pay one down as much as possible before bringing the others down?