How does a loan affect your credit score ?

pat0812 · ‎10-07-2012

Hello,

Let's say I have a credit score of 720 before I get an auto loan

I have 3 credit cards and that's it, no mortgages. payed always everything on time. under 10% UTI. no negative items on my report

How will the loan affect my score ? will it go down ? if I get a 15k loan, does that count as UTI ? (because right now i only have a 1200 CL)

Will my score go down because I owe money ? Or will it go up every month when I pay on time ?

If after a year i want to pay off the loan in 1 payment will that hurt my score ? or improve ?

FICO 8's EX 770 EQ 751 TU 771 (1/16/17)
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pat0812 · ‎10-07-2012

another thing

i understand that it will help my score to have a loan, because it gives you a good mix of different credit lines.

Is that the case only while the loan is still actual ? let's say in 3 years when the loan is fully paid, will that stay in my credit report forever and give me the extra points of a good mixture ?

FICO 8's EX 770 EQ 751 TU 771 (1/16/17)
Amex Gold Premier rewards ( Charge Card)
Amex Blue cash - $47,800 Wells Fargo - $15,000 Citibank Simplicity - $13,800 Barclays Apple - $13,000 Walmart Mastercard - $8000 Chase Slate - $7,200 Discover It - $5,500 Capital One - $5,250

CribDuchess · ‎10-07-2012

@pat0812 wrote:
Hello,

Let's say I have a credit score of 720 before I get an auto loan
I have 3 credit cards and that's it, no mortgages. payed always everything on time. under 10% UTI. no negative items on my report

How will the loan affect my score ? will it go down ? if I get a 15k loan, does that count as UTI ? (because right now i only have a 1200 CL)
Will my score go down because I owe money ? Or will it go up every month when I pay on time ?

If after a year i want to pay off the loan in 1 payment will that hurt my score ? or improve ?

An auto loan does not factor into your UTIL. UTIL is based on revolving, not installment loans.

If this is your first installment loan, your score may get a slight boost from adding an installment loan. Of course, YMMV. I just added a new auto loan and my score did not change at all. No effect. However, I had two paid auto loans on my reports as well as a mortgage that has been reporting for almost 19 years.

FICOs: TU08 842 EQ08 850 EX08 850

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Shogun · ‎10-07-2012

You will take an initial hit due to AAoA and a HP. However this will fade over a little time. Installment accounts don't factor into you Util. If you age it for a year and pay it off, it will stay as a positive TL for about 10 years so no problem there.

Starting Score: 504
July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
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Current scores after adding $81K in CLs and 2 new cars since July 2013
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