Ideal # of Installment Loans?

[Anonymous]

First, can someone please confirm that my student loans are considered "installment" loans, correct? NOT my credit card accounts?

As a result of multiple student loan disbursements, I currently have 7 open installment loans. Experian is telling me that less than 5 installment loans is ideal. If it would provide a good jump in my FICO, I could pay off 3 of the loans to make it so that I only have 4.

Does everyone agree that 4 installment loans intead of 7 will will have a positive impact on my FICO score??

[MarineVietVet]

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@Anonymous wrote:

First, can someone please confirm that my student loans are considered "installment" loans, correct? NOT my credit card accounts? Yes Student Loans are considered installment loans.

As a result of multiple student loan disbursements, I currently have 7 open installment loans. Experian is telling me that less than 5 installment loans is ideal. If it would provide a good jump in my FICO, I could pay off 3 of the loans to make it so that I only have 4.

Does everyone agree that 4 installment loans intead of 7 will will have a positive impact on my FICO score?? I'm not sure about this and so won't comment beyond that.

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[llecs]

IMO, and IME, having 0 loans is better for your FICO score than 1 or more. Experian give FAKO advice (because they don't offer FICO scores) and it may be true in their case with the PLUS or Vantage FAKOs that having installment loans help your score, but that's not generally the case with FICO. In FICO-speak, installments include SLs, mortgages, car loans, personal loans, etc.

[Anonymous]

I'm not suggesting that having any installment loans is beneficial. I pay all 7 installment loans with one monthly payment so I always think of them as 1 loan, but in reality, they are 7 different loans with different pay-off balances. I cannot pay off all 7 of them right now because a few have higher balances of $19K, $10K, etc. However, a few others are very low ($1K, $2K) so I could reasonably pay them off very quickly.

My question is, should I just keep paying all 7 loans each month like I have been (in conjunction with saving for a house) OR is it actually beneficial to have less than 5 installment loans and therefore, makes sense for me to bite the bullet (save a little less for a few months) and pay a few of them off to increase my credit score??

[RobertEG]

Installment loans, only one or two, are all you need to show credit mix under the fairly insignigicant category of credt mix.

No significant increase in FICO score by reducing the high number if installement loans.

More bang for the buck into putting that money into your higher interest rate and higer % util revolving (CC) accounts.

[Anonymous]

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@Anonymous wrote:

Experian is telling me that less than 5 installment loans is ideal. If it would provide a good jump in my FICO, I could pay off 3 of the loans to make it so that I only have 4.

Does everyone agree that 4 installment loans intead of 7 will will have a positive impact on my FICO score??

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I'm not sure where you're pulling your Experian from.  When you pull a report with a FAKO score, it will always give you FAKO advice.  Following that advice can be and often is detrimental to your FICO score.

Pull at least one FICO from this site - both EQ & TU are available here.  Google "myFICO discount codes" for a price break.  Your report will give you a FICO score as well as "Things that are Helping your FICO Score" and "Things that are Hurting your FICO Score."  Those items will help you determine what your best steps would be.

FICO can ding you for too many accounts with balances (they include all accounts - both revolving and installments in this calculation).  As you PIF any of your student loans, you will decrease the number of accounts with balances. 

The installment loans will continue to report for about ten years even after being PIF'd.

[alleycat1975]

Have you considered doing a colsolidation of all of them into one account VIA direct loans?   I don't kow if it would make a difference but it would create one balance instead of several..  Or pay off the lower balances, and consolidate the others.

Thats what I did.  But again, i don't know if it really made a difference in my scores as at that time i wasn't paying attention to scores, i just wanted to pay once and not a few different times.

[Anonymous]

alleycat - there are private loans so I cannot consolidate through Direct Loans - any private loan consolidation loan is like a regular consumer loan and is credit based, so not a good option for me right now.