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Question By
bostonlady04

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Why did my credit drop due to income based repayment plan for student loans?
I am doing an income based repayment plan with Navient, because I am paying less than what is accruing for interest&principal, technically my balance keeps increasing. That increase drops my credit score, which is hurting my chances for mortgage applications. Anybody else encounter this issue, and what was your experience/result?

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The credit score model computes your amount currently owed against the original loan amount.  As your amount owed is increasing as opposed to decreasing with payments, you are suffering from the decreases in your score.   You might want to put home ownership on hold at this time, as you may not be in a position to handle the responsibilities that come with that loan.  (IE: cost of new roof, appliances, other repairs).  There are also programs in place to reduce and/or entirely forgive your student loans as long as you are willing to make the live changing events that are associated with it.  (IE:  Public Service,  Teacher in an inner city, etc.)  

Reply by
bostonlady04

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We have no problems with the responsibilities that accompany homeownership, however, those things will not cost $1200+ each and every month which is what the student loan payments would approximately be. I'm curious if this is weighted heavily when lenders are looking at applications though. And no, I don't qualify for any programs to reduce/forgive my debt - I did not get a degree in a field where public service is an option like teaching, etc. Thank you for your help.

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