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Switching into REPAYE
October 15, 2018
2:36 pm
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October 15, 2018
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Hello,

I recently switched my student loans into REPAYE. Unfortunately this caused my credit score to drop roughly 60 points. I have been using credit karma and credit wise to monitor my score and they were all on a nice upward trend. That is until I switched my loans into REPAYE. Is this a normal occurrence? If so, how long can I expect before my credit score return to normal? I’m going to be buying a house using a physician mortgage and from what I’ve read this needs to be at least 690. Thanks.

October 15, 2018
4:37 pm
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Indiana
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60 Points is a pretty big drop. I’d be shocked if switching to REPAYE was the reason behind the drop.

I’m certainly not saying it is impossible… just that I’ve never heard of a big credit score drop being caused by changing repayment plans.

Were you on a forbearance or a deferment recently? Sometimes changing repayment plans can result in an “administrative forbearance” because the loan servicers haven’t processed you application yet. If a forbearance or deferment showed up on your credit report, that could conceivably explain the dip in score, and it should go right back up once the new payment plan is in place.

Other than that… I’m stumped. I’ll reach out to a couple credit experts I know to see if they can offer any explanation.

October 15, 2018
6:38 pm
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No we stopped using my credit cards completely so my credit card balance goes down every month. Obviously the amount on my loans goes up every month but honestly the only thing was I went from deferment and into REPAYE. On credit karma it says “Between October 4, 2018 and October 9, 2018 the following remark was removed from this account:

Student loan – payment deferred”

Thank you for your help. I do know that credit karma uses their own formulas and isn’t truly my credit score.

October 15, 2018
8:45 pm
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Indiana
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The “payment deferred” would explain it.

That credit karma report is showing that your student loans are not currently in repayment. Once REPAYE gets up and running and shows up on your credit report, the drop because of the “payment deferred” should go away.

October 15, 2018
8:59 pm
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It says that this mark was “removed from this account.” My guess would be that my account has switched from deferment to repayment. Hopefully after my first payment this should go away. Thank you for your help.

February 15, 2019
11:41 am
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Rah
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I recently got approved for the IDR/ or IBR and I still will make payments every month although I was approved for “$0” monthly payments. How does this help my credit score? I know that this cuts the missed payments dings and helps with DTI ratio, but how if in any way does this help improve the actual credit score? I know me simply applying doesn’t not erase my bad history but just curious if going forward under this plan will my credit score number increase? Thank you so much for your time!

February 19, 2019
8:56 am
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Indiana
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This will help your credit score in the sense that having $0 payments will prevent you from missing any payments going forward. Balance changes have a minimal effect on credit score, but on time payments is a huge factor.

March 19, 2019
2:08 am
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Me myself and I
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I have student loans and have been in an internship program therefore I have been in deferment with my loans. I am currently working a job
with a salary and getting Social Security. I am unsure if I can stay in my deferment as I won’t be in an active internship any longer. As well, I
have recently received an inheritance and I am wondering if the student loans will require me to give up my inheritance to pay off the loans.
During the time of my internship my compound interest went sky high and drove my loan balance really high. I feel like I am stuck and trying
to work and get ahead while being age 65 is pointless. I should just remain poor and homeless just to try and live on my meager Social Security
alone and stop working.

March 19, 2019
8:43 am
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Indiana
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Couple things here.

First, looking into an Income-driven repayment plan right away might be the best move. If you choose REPAYE it may help slow down the balance growth. Its possible you could get $0 per month payments, which would be better than a deferment. https://studentloansherpa.com/paying-0-month-student-loans/

Second, the inheritance shouldn’t have any impact on your student loan payments: https://studentloansherpa.com/inheritance-increase-payments/

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