What was relevant five years ago is completely changed for today's market.
Student loans do not effect your credit as much as a credit cards.
Credit scores will recover nicely when your credit balances go under 50% of the maximum limit.
The interest rates on those credit cards is significantly greater than the student loans. Paying down those credit cards is going to give you a 'bigger bang for your buck'.
I can't tell whether you could increase your credit from 638 to 750 for a couple of reasons.
First, paying off a student loan will not always help you with credit score because it's a positive thing to have a loan or mortgage in your credit record. It shows that you have stable credit.
Second, paying off your credit card will help your credit score but depending on how much you owed and what your credit limit are. For example, if your credit limit is $25,000 and you owed $2,500 then paying it off will increase your score but not going to be hundread points. On the other hand, if your credit limit is $4,000 and you owed $2,500 then I'm sure you can easily increase 50 to 100 points on your credit score. It affect two factors of your account calls "The ability to pay off your debts" and "Debt Ratio".
Use only 25% of your credit limit. Going over that limit dings your credit score. Then always pay off on every month's due date.
Call me 408-316-0793 and I will give you simple rule to follow so that in 6 months time you can get your scores up to 800.
Fred Yancy and Teri Velios gave you excellent answers.
I will add that most credit reports that I have seen do have errors on them. In most cases those errors are minor, but in some cases those errors can have a significant negative impact of 100 points or more.
My experience with credit reporting agencies and their willingness to voluntarily correct errors on credit reports has not been good.
I have found that often a letter from an Attorney to the credit reporting agencies, reminding them of their legal obligations to corect errors and the penalties that the credit reporting agencies face if they do not voluntarily correct errors is often essential as part of the effort to correct errors on your credit report.
Fortunately a letter fom an Attorney does not cost thousands of dollars, the cost is usually only several hundred dollars, but it can save you thoudands of dollars in interest costs on your mortgage. A letter to the credit reporting agencies from an Attorney on the Attorney's letterhead can work wonders if the credit reporting agencies are not willing to cooperate with you to correct errors on your credit report.
My experience with credit reporting agencies is that they are not very good at voluntarily cooperating with you to correct errors on your credit report, however when they receive a letter from your Attorney they become very cooperative with you to correct errors on your credit report.
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: firstname.lastname@example.org
Credit scores, along with your overall income and debt, are big factors in determining whether youâ€™ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:
1.Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone elseâ€™s poor financial management.
2.Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.
3.Donâ€™t charge your credit cards to the maximum limit.
4.Wait 12 months after credit difficulties to apply for a mortgage. Youâ€™re penalized less for problems after a year.
5.Donâ€™t order items for your new home on credit â€” such as appliances and furniture â€” until after the loan is approved. The amounts will add to your debt.
6.Donâ€™t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.
7.Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
8.Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.
My recommended lender has a program where he can run scenarios for you. Give him a call.
Have an amazing day!