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Valued Contributor
debtisgood
Posts: 1,126
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

It is possible you were rebucketed for your amount of new credit. That would still be a huge hit but some people have taken sizeable hits from rebucketing but it has mostly come back over the next few months.
 
I wouldn't worry about the score drop in the next few months as long as you keep your util low. Your creditors shouldn't worry if you are managing all your accounts responsibly. Why don't you do a pull in a few months time to see if the score is still that low and only then worry about it. (if you are working on getting a mortgage soon that advice goes out the window, find out whats going on ASAP)
 
 
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tmacar
Posts: 91
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

I hate sounding ignorant, but what is rebucketing?

As for new debt, I only added $2500, which is only about 5% of my income. I had $4943 with a "limit" of $8009. or a 62% ratio.

I now have $7443 with a "limit of $1059, a 71% ratio. Even if it was revolving instead of installment, that wouldn't have cost me 56 points.

I don't think FICO uses this, but in case they do, I only have a debt to income ratio (revolving and installment together) of 25%. And that's according to my Equifax - it's really quite a bit lower, because I just paid all my revolving down, from $4231 to $869, changing my revolving ratio from 81% to 15%, and only one of the new balances has shown up on the report yet (and that one was only a drop from $86 to $29).

In fact, that's the big problem. According to the MYFICO simulator, once all the new balances post, I was gong to go from 658 to at least 728, possibly as high as 768.

Based on going over 720, I've been offered a no down payment, 5.5% loan on a new vehicle that has nearly $5,000 in rebates on it - UNTIL JUNE 1. Then the rebates go away. I just don't have several months to wait.
Valued Contributor
debtisgood
Posts: 1,126
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

tmacar
 
FICO uses scoring buckets, in a way to better differentiate between good and bad credit risks among different groups.
 
Thus, someone with only a 1.5 year credit history will not be directly compared with someone with 40 years of credit history. He or she will be matched up and scored on a curve for that group. It is probably essential to be in buckets with long credit histories and no baddies to achieve high scores of 800+.
 
Some of the talked about buckets on this board are:
New credit
2-5 years
6+
probably over 12+
then a bucket for people with BK and/or late payments
 
By obtaining new credit you could have been placed into the New credit bucket, essentially getting graded on a different curve with probably a slightly different formula.
 
I would expect you to have a large increase with all your balances lowering, but I wouldn't expect 768. I would, however, expect 720+ if you weren't in fact rebucketed.
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tmacar
Posts: 91
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

Thanks for the explanation. I don't think I could have gotten rebucketed, then. The age of my credit history hasn't changed, it's still back to August 1998, almost 10 years. One of the first things I looked for was whether any older entries had disappeared and shortened my history, and they haven't. And at $7,443, my total debt (isn't high enough to have caused a rebucketing, I wouldn't think. And that's everything, installment and revolving both, even without counting the recent approximately $3,400 reduction in revolving - in fact, come to think of it, I've paid off more revolving than the amount I just borrowed on the installment loan, by about $800 or $900.

MYFICO said I WOULD go over 720, to at least 728. I never expected to get to the high end, 668, but had hopes of maybe 740 or so, and thought the 728 was a certainty. But that was when the starting point was 658. With a starting point of only 602, I'm not sure I'll even make 700. Something is seriously wrong here.

Remember, there have been absolutely NO changes whatsoever in my Equifax, other than the addition of a single $2,500 installment loan from my credit union and a balance reduction from $81 to $29 in one of my revolving accounts.

I already had an Equifax for May 5, when I was at 658, and I pulled another one on May 10, when I was at 602. These were both pulled directly from Equifax, not through MYFICO. I compared the 2 reports, category by category and account by account. There are absolutely zero changes, even in Remarks sections, except the 1 new account and the 1 balance reduction.
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tmacar
Posts: 91
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

Another thing - I found and read through the rebucketing string, and I didn't see anyone who got hit for anything like 56 points.
New Contributor
tmacar
Posts: 91
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

I just called MYFICO. By the way, don't try calling them on a Monday. I spent 55 minutes on hold this morning before I gave up, and another 15 minutes on hold this time before I got a person. I suspect it's because it's Monday, and all the problems people ran into late on Friday and on Saturday and Sunday are causing calls today.

The first thing I got was that she didn't have any idea. It took about 10 minutes to get that far, but that's what it amounted to. Then she said she could "escalate" it, but she couldn't do that unless she could look at the current Equifax to verify that the only change between May 5th's 658 report and May 10th's 602 was, in fact, the new credit union loan for $2,500. She couldn't escalate based on my saying that was the only change. And, of course, she can't see the May 10 report I pulled at the Equifax site, and she said even if she could somehow see it she couldn't escalate based on that either. She had to see the current Equifax that FICO has and is scoring from. So I had to spend $15 to pull a new Equifax through MYFICO, so that she could see it on her system.

So she's escalating it. What does that mean? "Someone will contact you within 48 hours." Whether that means by phone, email, or mail, she didn't know. Customer SERVICE? More like Customer STALLice, I'd say.
New Contributor
tmacar
Posts: 91
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

Oh, forgot to mention. The May 11 report has me back up to 605. Another revolving account's new balance has reported. I had one that went from $81 to $29 showing already on May 10, which had no effect on the score. This second one went from $293 to $77, and that apparently got me 3 points. It's hard to know how much I'll get for the rest, the percent of balance decrease will be different every time. Coincidentally, these 2 are the accounts that got the least amount of money paid on them. There are 8 more revolving accounts, each one with a decrease somewhere between $400 and $800 dollars, and one newly paid off installment loan (a $250 drop) yet to report, and 3 of the revolvings (and the installment loan, of course) will be going to zero balances, and I've heard that having some accounts with zero balances helps the score.

Unfortunately, unless I get one heck of a lot more than 3 points for each paid down or paid off account, I'm sure nor going to break 720. And if I don't break 720, I lose out on a vehicle with $5,000 in rebates that expire at the end of May, because I need the 720 for a no down payment 5.5% loan.

I'm just praying that the 56 point drop for a single new $2,500 installment loan was some kind of mistake, and that whoever the thing has been "escalated" to finds and fixes it. I don't have much hope, though. I was thinking that maybe something got messed up in the transmission from Equifax to FICO, so FICO was scoring from an erroneous report, but they're not. What they have is identical to what I got directly from Equifax.
Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

Equifax is just plain crazy lately. My other scores keep going up while EQ lays like a dog. It appears as if I even got credit this last pull for 8 accounts out of 14 aging to the 1 year BD and still the score didn't move. This even after I paid my car loan down from 12K to under 4K on a 25K initial line from last June. Make sense to you?
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tmacar
Posts: 91
Registered: ‎03-25-2008
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

smallfry,

I hate to admit it, but kinda.

Equifax itself doesn't actually score the report. They just report whatever the creditors send them. Then all that information gets looked at by a computer which then runs it through an established algorithm and assigns a numerical score.

Equifax is scored with the FICO system. Experian and TransUnion use different systems, I don't remember what they're called. If you pull them from any site other than MYFICO, you'll be getting the score that resulted from a different scoring system.

If you REALLY want to compare the 3 reports, you need to go to the MYFICO site and pull Experian and TransUnion. Then you'll be able to see how they compare when they're all scored with the same system (FICO, of course). If you see differences then, there must be differences in the information in the actual reports.

I'm not sure what effect if any the 1yr age on a revolving account has on the score. I know a new revolving will drop your score, and too many new revolvings will kill you. Have you seen any score increases since the revolving accounts got past, say, 3 months old? Maybe as they get older you get just a few points at a time periodically over the course of the first year.

As far as I have been able to figure out in the nearly 3 years I have been monitoring my scores, installment balance doesn't have much of an impact on the score unless an installment loan puts your total debt higher than they like to see. That's why I'm so upset over a 56 point drop when the only change to my report is a new installment loan. It only puts my tiotal debt, recvolving and installment together, at $10,000, which is actually pretty darned low for the average American consumer, and should not have cost me what it seems to have. It's a total debt lower than most people's car loan all by itself.

Sometimes, people say, when an installment loan is reported without any payments showing yet, you get dinged fairly heavily because the credit limit and the balance are the same. If that's true, they ought to change it. Everyone's balance is identical to the limit whenever they open an installment loan. Not like a revolving account, where you are given a credit limit and then decide yourself how much of it to use.
Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007
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Re: ABSOLUTE FICO INSANITY Re: Does an installment loan hurt my score?

tmacar I've been around here a while. Do you think I would comment on any scores other than true FICO's? :smileyhappy:

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