What's worth a higher FICO score? Revolving or installment?

[paulko85]

What is worth better for a better credit score? 

$30k credit card debt paid off in 60 months or;

$30k car loan paid off in 60 months?

[Kratos-TM]

Revolving of course. Depending on the utilization, paying off 30K in CC debt could yield a massive amount of points. Paying that same amount on a car in most cases yield no points.

I gained 60 points on my score when I paid off my CC's. I gained no points for paying off 3 cars in 1 month's time.

[user5387]

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@paulko85 wrote:

What is worth better for a better credit score? 

$30k credit card debt paid off in 60 months or;

$30k car loan paid off in 60 months?

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Reducing high CC utilization will do a lot more for your score than paying off an installment loan.

But if you do this over 60 months, the effect may be gradual, and there may be a lot of interest to pay.

A lot of people get an installment loan to clear out the CC debt.

[guiness56]

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@user5387 wrote:

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@paulko85 wrote:

What is worth better for a better credit score? 

$30k credit card debt paid off in 60 months or;

$30k car loan paid off in 60 months?

---

Reducing high CC utilization will do a lot more for your score than paying off an installment loan.

But if you do this over 60 months, the effect may be gradual, and there may be a lot of interest to pay.

A lot of people get an installment loan to clear out the CC debt.

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How is this supposed to work?  The CC debt would still be there.

[user5387]

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@guiness56 wrote:

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@user5387 wrote:

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@paulko85 wrote:

What is worth better for a better credit score? 

$30k credit card debt paid off in 60 months or;

$30k car loan paid off in 60 months?

---

Reducing high CC utilization will do a lot more for your score than paying off an installment loan.

But if you do this over 60 months, the effect may be gradual, and there may be a lot of interest to pay.

A lot of people get an installment loan to clear out the CC debt.

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How is this supposed to work?  The CC debt would still be there.

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 I simply mean shifting the CC debt to an installment loan.  I did this once via Lending Club.

Since these are scored differently, there's typically a score jump.

[tld409]

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@user5387 wrote:

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@guiness56 wrote:

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@user5387 wrote:

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@paulko85 wrote:

What is worth better for a better credit score? 

$30k credit card debt paid off in 60 months or;

$30k car loan paid off in 60 months?

---

Reducing high CC utilization will do a lot more for your score than paying off an installment loan.

But if you do this over 60 months, the effect may be gradual, and there may be a lot of interest to pay.

A lot of people get an installment loan to clear out the CC debt.

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How is this supposed to work?  The CC debt would still be there.

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 I simply mean shifting the CC debt to an installment loan.  I did this once via Lending Club.

Since these are scored differently, there's typically a score jump.

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I didn't have as much cc debt but I did a similar thing by shifting cc debt to a CU installment loan earlier in the year. The CC rate was slightly lower at 9.9% and loan was 11.9%. My fico score climbed 20 points then. 

[paulko85]

good info.

I had recently paid off one of my highest credit limit accounts with BofA. they had then offered me a 0% apr account for 16 months which i applied for and was denied. i called them and said to consolidate some of the credit from the account i paid off and i ended up opening a 10,000 credit account with 0% apr. i balance transfered approx 9.5k into this new account so i'm saving a bit of interest as i continue to pay off my debt... 

more recently, my friend loaned me a large sum o money for 5% interest and i paid off alll my debts (except the 0% account) and i'm just paying my friend and ultimately pocketing a nice chunk of interest payments. i'm excited to check my credit score in about a year when all my debt is gone. 

i think my score was lingering somewhere between 700 and 730 the last i checked a few years ago with a high debt ratio. i hope it goes to 800+

[RED_Knives]

" I simply mean shifting the CC debt to an installment loan. I did this once via Lending Club.

Since these are scored differently, there's typically a score jump."

great idea did not realize these scored differently. Why would CC debt affect your fico in such a drastic way vs installment. monetarily if you have debt worth 1000 why would the CC be more harmful to fico?

[thom02099]

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@paulko85 wrote:

What is worth better for a better credit score? 

$30k credit card debt paid off in 60 months or;

$30k car loan paid off in 60 months?

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As others have said, the loan is scored diffferently.  Since it's finite, having a specific amount and specific monthly payments, apparently FICO looks at that diffferently than revolving credit, which can be very fluid.  

I just took out a consolidation loan and paid off some credit cards, and got a 28-36 point score increase.  I'm expecting another 10-25 point increase when reports from March start showing up.  I also plan to pay off the installment loan in a few months when I retire, and I'm looking forward to my scores ending up in the 800 neighbourhood !