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Frequent Contributor
brother7
Posts: 373
Registered: ‎02-06-2009

Adding installment loan to break 800. Good idea?

I'm so close to EQ FICO 800!

 

Currently, I only have revolving accounts reporting.

OPEN: 1 AMEX, 1 MC, 1 VISA, 1 store card

CLOSED: 1 store card

 

I don't have a mortgage, car loan or other installment loan.

 

Wanting to break into the 800 club, I was thinking about taking out a small short-term loan from my credit union, say $500 6-month loan. Do you think the change in credit mix will result in a credit score increase?


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
04/04/2014 Current - EQ 779 (Walmart Discover TU FICO 08 Classic)
GOAL - 800! - App free since 03/13/2014
Established Contributor
jamie123
Posts: 657
Registered: ‎03-22-2012

Re: Adding installment loan to break 800. Good idea?

What is your AAoA?

 

Adding a short term installment loan might actually drop your score. The higher your score the more impact HPs and new accounts drag it down. If you were to get an installment loan for 1 to 2 years your score will have time to recover and move higher, 6 months might be too short.

 

People in the 800 club usually have an AAoA of at least 8 years. If you want to prep your score for a more solid score later, you might consider adding 1 or 2 more CCs. With having only 4 CCs every time you add additional credit it will wreack havoc with your AAoA. AAoA is worth about 50 points total in a FICO score. You need a good AAoA to make 800 and be able to stay there.



Starting Score: EQ 658 6/18/12
Current Score: EQ 680 9/23/13
Goal Score: EQ 720+
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Frequent Contributor
brother7
Posts: 373
Registered: ‎02-06-2009

Re: Adding installment loan to break 800. Good idea?

On 10/16, my ScoreWatch said my AAoA was 8 years, oldest acct 14 yrs.

On 10/25, I app'd and was approved for 2 credit cards.

On 10/27, the 1st of those cards (an AMEX, which I previously didn't have) was reported and my EQ FICO increased 19 pts.

Still waiting for the 2nd card (an Amazon VISA) to report.

 

Your analysis of AAoA makes sense. I guess it's a good thing that I add 2 more cards now.

The primary thing I look for when cardshopping is cashback rewards (the AMEX) or cards I'd actually use (Amazon). Maybe I'll add one more (personal Costco AMEX), then garden for a few years. By that time, I'll be ready to go house hunting :smileyhappy:


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
04/04/2014 Current - EQ 779 (Walmart Discover TU FICO 08 Classic)
GOAL - 800! - App free since 03/13/2014
Established Contributor
jamie123
Posts: 657
Registered: ‎03-22-2012

Re: Adding installment loan to break 800. Good idea?

The people that consistently score in the 800s have some things in common. They are:

 

6 to 8 credit cards that are each at least 10 years old.

A 30 year mortgage that they have had for 20 years.

An old paid off car loan.

A car loan that has been paid on for a few years.

 

Here is a very interesting article about how one man does it: http://www.cleveland.com/business/index.ssf/2012/10/westlake_man_has_one_of_the_hi.html

 

You really do need to think about building a thick file. This way when you do get new credit it doesn't drop your score down too much.



Starting Score: EQ 658 6/18/12
Current Score: EQ 680 9/23/13
Goal Score: EQ 720+
Take the FICO Fitness Challenge
Established Contributor
bettercreditguy1
Posts: 688
Registered: ‎02-11-2012

Re: Adding installment loan to break 800. Good idea?

I agree, do not obtain credit just to attempt to get there faster. The new inquiry, (the hit of a new account especially a cc will lower your score upto one year). My 29 year old son has an 819, no credit cards and no mortage. He has three paid automobile loans only on all of his reports. You appear to need just passing time to let the alogrithm work for you. Stay in the garden. When the time is right, then apply for your mortage. AS long as you are over 760, you will get the very best interest rates available. Best wishes for continued sucess!.

Starting scores 01/ 02/2012 EQ 707 TU 733 EXP 735 (FAKO)
Updated scores 04/13/2014 EQ 792 TU 763 EXP 768 (Fico)


Remember the Three P's: Pay early in Full, Pay on Time, Patience
Established Contributor
my-own-fico
Posts: 1,032
Registered: ‎01-05-2010

Re: Adding installment loan to break 800. Good idea?

[ Edited ]

jamie123 wrote:

 

Here is a very interesting article about how one man does it


 

My guess is that his 848 score is not an 04, but an 08.

 

As for installment loans, they'll benefit you (a little) once just a fraction is unpaid (the AAoA, inquiry and new credit are also less of a factor by then). Even when paid off in full and closed, the mix still plays a factor, I think Barry once told llecs.

 

Have you visited myFICO's Retirement Topics forum? ... Confessions of a Credit Junkie ... In the credit card garden since 2010
Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007

Re: Adding installment loan to break 800. Good idea?


my-own-fico wrote:

 

As for installment loans, they'll benefit you (a little) once just a fraction is unpaid (the AAoA, inquiry and new credit are also less of a factor by then). Even when paid off in full and closed, the mix still plays a factor, I think Barry once told llecs.

 


He said that once, but I always had it in the back of my head that it was incorrect. I questioned him because with no other changes, and by pulling my reports the day before and the day after the reporting of my only and newly closed loan, one FICO increased and the other decreased. The increase I get because of an added $0 balance. But I never could get over the decrease and attributed it to a change in mix (down only 5). I quizzed Barry and he was adamant that paid TLs still factor into mix.

Established Contributor
cashnocredit
Posts: 928
Registered: ‎07-18-2009

Re: Adding installment loan to break 800. Good idea?

I had a mortgage and looked closely beefore and after paying it off. I didn't see any material difference in FICO scores.  Small changes in util fro 1 to 10% made a lot more difference. 

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k
Established Contributor
ccnewcc
Posts: 560
Registered: ‎09-29-2012

Re: Adding installment loan to break 800. Good idea?


brother7 wrote:

I'm so close to EQ FICO 800!

 

Currently, I only have revolving accounts reporting.

OPEN: 1 AMEX, 1 MC, 1 VISA, 1 store card

CLOSED: 1 store card

 

I don't have a mortgage, car loan or other installment loan.

 

Wanting to break into the 800 club, I was thinking about taking out a small short-term loan from my credit union, say $500 6-month loan. Do you think the change in credit mix will result in a credit score increase?


Perhaps the FICO numbers have seduced you?

 

Your 786 is fine enough to get great rates.

 

Why take out credit when you don't NEED the credit.

 

786.  Nice!

 

800 meh who cares.


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