Before taking out a student loan, would it be best to pay off as much of my Credit Card as possible to help get the best APR%?

I have 1 CC with a $5000 limit unused. I have another with $7500 on a $10000 limit. I pay my car loan on time and always make the minimum on my CC payments (still on a 0% APR).

Would having so much on a CC really hurt me when I go to different CUs or Banks looking for a student loan?

Last score I saw was around the 750 range.

  • 1
    Are you asking about an undergraduate or graduate student loan?
    – Michael
    Apr 10, 2017 at 14:15
  • 2
    Can you pay off the entire card? I would STRONGLY recommend getting as little in student loans as possible (preferably zero) by either cutting expenses, getting extra work, taking fewer classes, etc, but that really isn't an answer to your question.
    – D Stanley
    Apr 10, 2017 at 14:22
  • 3
    This like asking if you should shoot yourself in the left or right foot. Why not work and pay off your debts?
    – Pete B.
    Apr 10, 2017 at 14:22
  • 2
    Also, interest rate is going to be the least of your problems after you graduate (if you graduate - 50% of students don't). The magnitude of your loans is going to be the main factor, not interest rate.
    – D Stanley
    Apr 10, 2017 at 14:24
  • 1
    Without knowing your current score it's really impossible to give advice. Most basic underwriting has rate tranches based on score. Like 500 is X%, 640 is X-0.25%, 680 is X-0.6%, 740 is X-1.25% or whatever. It's possible you could be at on the cusp of a different underwriting class where 10 more credit score points would be meaningful, and likely made up by improving your utilization from the current 50% ($7,500 loaded on $15k of limit). Talk to the lender to find out the basic underwriting guidelines and pull your score.
    – quid
    Apr 10, 2017 at 17:19

1 Answer 1


If your credit score is favorable, the outstanding card balance will likely have little or no impact on your interest rate. Student loan debt is almost always classified as non-consumer debt, it's difficult to get student loan debt discharged via bankruptcy, and therefore it's a bit less risky for the lenders. Private lending interest rates will still vary by score, but there's always an upper limit on the benefits of a marginally better score, ie my 805 score doesn't really do anything for me that a 740 wouldn't. Furthermore, paying off early would likely have little impact on your score, according to this equifax article: Does Paying Off an Installment Loan Early Affect My Credit Score?

Edit: The article references installment loans which are not the same as credit cards, but the impact on credit is similar, except that a paid off credit card is not a closed account.

Federal Direct loans are need-based, so it would make no difference there.

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