Fico Score 2 Help

[Anonymous]

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@Anonymous wrote:

Any thoughts on bringing the student loan balances to below the original loan amounts. They are higher due to deferment and interest build up. The score factors mention loan balances too high relative to original balances.

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There has been speculation in some quarters that bringing total installment utilization from > 101% to < 98% (say) could give you a scoring benefit.  It's an interesting idea but it is highly speculative and (as far as I know) nobody has posted evidence that proves it. 

The reason code you are getting that says loan balances too high relative to original balances  has been shown to appear even when one's installment utilization is 75%, say -- some people get that reason code even when there installment utilization is quite a bit lower.  So the presence of that reason code does not in itself suggest you'd get any benefit from lowering your installment util to 97% (say).

Just for clarity, are you sure you are seeing that reason code on your mortgage scores?  (Not the reason code for your FICO but for your mortgage scores.)  If so, can you clarify which bureaus you see it on?  It would be very surprising if it appeared on the mortgage models for EQ and TU.  Experan would not be a surprise.

[Anonymous]

This is coming directly from my lender. Experian say loans, EQ says revolving loans, TU says nothing about it. I'm trying to get my experian score up since it's my Mid.

[Anonymous]

Any way you could tell us the exact text of what the score factors are, work for word?

My guess is that Equifax doesn't say "revolving loans" since loans are basically a subcategory of installment accounts, so they are not revolving.  My guess is that EQ might say "revolving balances" (credit cards).

It would be helpful to hear the exact wording for Experian too.

Again, it won't be strange if Experian mentions your loan balances, but it would be odd if EQ does, since the mortgage scores for EQ and TU are not supposed to care about loan balances.

[Anonymous]

I just re-reviewed:

Equifax says nothing about it

Experian says: 33 PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH

Transunion says: 010 PROPORTION OF BALANCES TO CREDIT LIMITS IS TOO HIGH ON BANK
REVOLVING OR OTHER REVOLVING ACCOUNTS

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@Anonymous wrote:

Any way you could tell us the exact text of what the score factors are, work for word?

My guess is that Equifax doesn't say "revolving loans" since loans are basically a subcategory of installment accounts, so they are not revolving.  My guess is that EQ might say "revolving balances" (credit cards).

It would be helpful to hear the exact wording for Experian too.

Again, it won't be strange if Experian mentions your loan balances, but it would be odd if EQ does, since the mortgage scores for EQ and TU are not supposed to care about loan balances.

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[Anonymous]

Good.  Nice to see that get confirmed. To recap:

* The EX mortgage model does care about the percentage of your open installment debt that you have managed to pay off.  Thus that reason statement.  People often see this reason code even when they have paid off a substantial chunk of their loans (e.g. if they have paid off 50% of each loan).  Thus the reason code is not talking about you being at > 99%.

* The TU and EQ mortgage models do not care about the percentage of your open installment debt that you have managed to pay off. 

Thus the absence of that reason statement. 

*  All models do care about your revolving balances.  You will gain scoring benefit if you were to pay down your cards to < 8.99%. 

As touches that last item, is getting friends or family to help you an option?

[DollyLama]

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@Anonymous wrote:

I just re-reviewed:

Equifax says nothing about it

Experian says: 33 PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH

Transunion says: 010 PROPORTION OF BALANCES TO CREDIT LIMITS IS TOO HIGH ON BANK
REVOLVING OR OTHER REVOLVING ACCOUNTS

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@Anonymous wrote:

Any way you could tell us the exact text of what the score factors are, work for word?

My guess is that Equifax doesn't say "revolving loans" since loans are basically a subcategory of installment accounts, so they are not revolving.  My guess is that EQ might say "revolving balances" (credit cards).

It would be helpful to hear the exact wording for Experian too.

Again, it won't be strange if Experian mentions your loan balances, but it would be odd if EQ does, since the mortgage scores for EQ and TU are not supposed to care about loan balances.

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I think paying off the small one is crucial, since it's closed and you are carrying a balance, any balance on that card is 100% utilization. Zero credit limit is hurting badly.

[Anonymous]

Yup, I agree with DL.

[Anonymous]

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* The EX mortgage model does care about the percentage of your open installment debt that you have managed to pay off.  Thus that reason statement.  People often see this reason code even when they have paid off a substantial chunk of their loans (e.g. if they have paid off 50% of each loan).  Thus the reason code is not talking about you being at > 99%.

*  All models do care about your revolving balances.  You will gain scoring benefit if you were to pay down your cards to < 8.99%. 

As touches that last item, is getting friends or family to help you an option?

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Unfortunately It would take too much $$ to get to <8.99%. Not an amount i would be able to ask for. So it isnt really an option. 

I did pay the little CC card today. It reports in 3 days so we will see what happens with that. I do have the $$ to pay my newer student loans down to <99%, but if it would do absolutely nothing for experian scoring, it would be wiser for me to keep the cash for closing. If its experimental, it might be worth it since 5 points is such a small move.

[Anonymous]

Good news to hear that you are paying off the small closed card ASAP, and that this card will be reporting to the bureaus four days from now.  (It may take another week before that updated balance makes its way into their database.  Hopefully it will happen a bit sooner.)

I think that leaves you with one exactly one open credit card... right?

How difficult would it be to get that card down to < 18.99%?  (From > 23%) I think the probability that this will give you a score boost is greater than the probability that you will get one from lowering your open installment debt from > 101% to < 98%.  The revolving breakpoint at 19% and the installment breakpoint at 100% are both speculative -- i.e. neither one could give you any benefit whatsoever.  But personally I think the chance that you will get a benefit with the revolving paydown is greater.

If the revolving paydown may be possible, I encourage you to get feedback from some of people more experienced in the theory of FICO scoring (as to whether it is advisable).  You could send a PM to Revelate and Thomas_Thumb, direct them to this thread, and ask their opinion. 

[Anonymous]

Yes just one open CC with a balance. I will message Thomas_thumb and see if he has any opinion on the loan balance vs. CC UTL. I have about 2 weeks until the CC reports, so i may be able to come up with some to get to 18%. I will update!

Thank you for all your help!!