Dear Liz: My student loan balance is just $7,000 and costs me $80 a month with nine years left to repay. I’d like to pay it off, but the problem is that I have no other debt, since I pay off my credit cards monthly. I’m afraid to pay off the loan for fear that doing so might hurt my FICO score.
Answer: A better reason not to pay off the debt is that it’s pretty cheap money. If you invest that cash instead, you may get a better long-term return. If you really want to pay the loan off, however, you shouldn’t let worries about your scores stop you.
Student loans typically do help your credit scores, and they’ll continue to so long as the lender reports them to the credit bureaus, which is typically for 10 years after you pay them off.
Having and using credit cards also helps your scores. There’s no need to carry a balance.
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