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Established Contributor
Posts: 565
Registered: ‎06-11-2007
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Credit improves as Installments fall

Just got off the phone with a Fico employee. The employee told me that
while Revolving debt (credit cards) are weighted heavier in the fico formula then Installment accounts (student, auto loans) you can expect your fico to improve as
you pay down installment debt. I know this is true because I just received a 8 point score boost via scorewatch because I made a significant payment against the principal of a student loan, which in turn lowered my overall debt by several hundred dollars.

This feeds into our earlier discussion about whether to pay down student loans faster or slower. The proven answer seems to be, IF YOU WANT A HIGHER FICO SCORE QUICKER, then start putting bigger money towards your loans. Or, if you like your fico to grow at a slow pace, then just pay the minimum balance owed each month.

I think all of us here want our Fico's to improve ASAP, so a proven way to do that is to pay down your installment debt faster. Of course, if you have a problem with high revolving debt (credit cards), then you need to tackle that first. After that, I am becoming a strong advocate for paying off loans faster then the minimum.

Your score will go up much faster!
Moderator Emeritus
Posts: 6,182
Registered: ‎03-29-2007
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Re: Credit improves as Installments fall

Yep, paying down any debt will only improve your scores.
Valued Member
Posts: 158
Registered: ‎06-15-2007
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Re: Credit improves as Installments fall

on myfico i tried that score simulation thing and it stated that i would raise my score 100 points if i pay my revolving accounts down below 30% over a 24 month period.  If i made one lump sum payment to pay them all down below 30% it would only raise my score 15 points.  crazy hu!!!
Super Contributor
Posts: 8,183
Registered: ‎03-25-2007
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Re: Credit improves as Installments fall



motoracer wrote:
on myfico i tried that score simulation thing and it stated that i would raise my score 100 points if i pay my revolving accounts down below 30% over a 24 month period.  If i made one lump sum payment to pay them all down below 30% it would only raise my score 15 points.  crazy hu!!!



When it calculates the score over a 24 month period it factors in the ageing effect as well as paying off all the bills. And it assumes perfection in that time, so the score increase is much higher
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Established Contributor
Posts: 565
Registered: ‎06-11-2007
0

Re: Credit improves as Installments fall

yes that's why--it's taking into account your most recent missed payment--so if it was a year ago, there isn't much sense in paying it off extremely fast, because you won't get the history of showing good payments, but if the account has been around for 4 years or so with no missed payments and you start rapidly paying it down, then you will get a big score jump
Valued Member
Posts: 158
Registered: ‎06-15-2007
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Re: Credit improves as Installments fall

I know ive got 1 freaking late this year it was with Harley Davidson I was in Iraq for 2 months, Im single so I had no one to make the payment for me. I sent a GW letter to HD and it was a big no!! dand it!!
New Contributor
Posts: 74
Registered: ‎05-10-2007
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Re: Credit improves as Installments fall

What about a student loan that's still in deferentment?...do they have any negative effect on your CR?
Valued Member
Posts: 158
Registered: ‎06-15-2007
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Re: Credit improves as Installments fall

late in 06
Frequent Contributor
Posts: 285
Registered: ‎06-05-2007
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Re: Credit improves as Installments fall

one of my student loans had a late payment on it , i notice when i paid it off, when i contacted them about it they verified it , i had no knowledge of ever paying  late, because if at any time if  i was unable to pay i would defer forber it, anyway i gave them a  gw call, and next time viewed my cr i one late was off. maybe you should try the same. good luck.....
Frequent Contributor
Posts: 285
Registered: ‎06-05-2007
0

Re: Credit improves as Installments fall

by the waythe one lateness was said to be in the beginning. my other student loan is good no lates. make the call and see what happens 
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