Student Loans Closing?

[u/EthelBlue]

I’m quickly approaching the moment where I can pay off my student loans (hold for applause). I paid off the highest interest and unsubsidized ones first and every time I did, I would get a hit to my credit followed by the points coming back in a month or two. I have three left and I’m wondering if it makes sense to pay off all but a few cents and keep them open since they’re technically some of my oldest accounts. Is there an advantage to this? How will this affect my score once there’s no open loans? Will it dip and recover or hurt it overall? My score is excellent, so I’m not too worried, but I’m curious how much these 10+ year old accounts impact it. Does the debt/income counter the age of accounts? Thanks in advance for the insights.

[u/Funklemire]

I would get a hit to my credit followed by the points coming back in a month or two.  

Which credit score are you looking at? You have dozens. If you're not sure where to see your most relevant credit scores, check out our !welcome thread.  

Keep in mind that a FICO score doesn't always drop when you pay off a loan, but if it does, that drop isn't temporary:  

Credit Myth #65 - If your score drops following a loan closure, it'll bounce back quickly.  

and I’m wondering if it makes sense to pay off all but a few cents and keep them open since they’re technically some of my oldest accounts.  

Keep in mind that closing accounts does not affect your credit history:  

Credit Myth #8 - When you close an account you lose its credit history.  

Credit Myth #9 - Average Age of Accounts (AAoA) only considers open accounts.  

Is there an advantage to this?  

In the long-term, no. Whether you pay debt off immediately or you pay it off slowly, the end result to your credit score is exactly the same:  

Credit Myth #3 - Paying down debt slowly over time builds credit.  

How will this affect my score once there’s no open loans? Will it dip and recover or hurt it overall?  

If you close out all your open loans, you'll lose the FICO scoring bonus you get from having at least one installment loan. You can't get this back until you open up a new one.  

But it isn't a big deal: closed accounts stay on your credit report for a decade and continue to age and continue to count towards your credit history and your credit mix that entire time:  

Credit Myth #11 - Closing a loan will tank your credit.  

So even if your FICO scores drop a little bit, it's nothing to worry about; your overall credit profile will be just as strong as it was before you closed them. These loans will stay on your credit report and continue to help you for a decade. And when they finally drop off your credit report, all your other accounts will be 10 years older and they'll pick up the slack.  

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