- Sep 20, 2012
Would there be any credit score advantage to rehabilitating rather than paying it off while it's in default? A better credit score could then save you money on things like insurance rates.So I am finally dealing with an old student loan of mine that has been in default for way too long (I know, I know).
We technically have enough to pay it off in full. Its 4400. It would make for a little tight 2 weeks. But we could do it. So here are my options
1. Pay it straight off. Be done with it. Lose a huge chunk of money, but it's a huge weight off my shoulders.
2. Rehabilitate my loan for $230 a month for 9 months, then pay $40/month till it's paid off. We have the money each month, it would come from our monthly budgeted CC payments each month. Use that big chunk to pay off 1/3 of our current CC debt.
Our two largest cards are currently interest free until 12/19 (4200) and 5/20 (6400). Our budget is made through the end of the year and our budgeted CC payments currently outpace our total CC debt so it would pay off our current balances and pay for the rest of our Disney trip as long as we don't add to our debt. We've been doing really well to not add more than $100 a month to our debt by cutting our spending significantly. But I am struggling by not seeing quick progress (just the way my brain works). Making a $4400 on our CC balances would feel good. But I feel like it would be smarter to just pay the student loan straight off.