I can't speak for every situation, but I would think those savings are worth whatever impact on your credit score that removing loans from your credit diversity might have.And consider what you're preserving a credit score for in the first place.In fact, I'd go as far as to say that concern for your credit score should almost never prevent you from paying off your loans early, and paying early is likely to improve your score in some cases.I think it is worth taking a minute to explain a little about credit scores in general.However, FICO remains the most used and is often a good indicator for other scores.
So it is always worth exhausting options such as deferral or forbearance with your lender in order to avoid default and damage to your credit score.
So I did a little research -- including a wild Saturday night poking around on the FICO Banking Analytics blog -- asked some of my very intelligent colleagues about it, and started monitoring my credit.
(I use Credit Karma because it pulls out the key factors that affect my credit, and it's free.) What I learned was that while paying off student loans early may, in some cases, reduce your credit score, the advice to "be careful about paying off early" is a little misguided.
I refer you back to my wild Saturday night where I stumbled across something from the FICO Banking Analytics blog.
The people who calculate the most widely used credit score write "I'd like to set the record straight on exactly how student loan debt is factored into the FICO® Score." "A student loan receives no special treatment by the FICO® Score; it is treated like any other installment loan." Oh...