Fico Value of a Paid Installment Loan

[Anonymous]

Always read that a closed credit card account will keep reporting for (hopefully) 10 years and continue to accrue positive benefits.  Is the same true for a paid off installment loan?  I hear about scores taking considerable hits when auto/mortgage/personal loans are paid off.  What residual value do they provide vs. never having been on the report at all?  Does there value show up more in the more specialized  scores for mortgage, auto, etc., as opposed to Fico8?

[Bankrupt2019]

Yes, a closed installment account will still remain and continue as a positive account. The reason you lose points when an installment loan is closed is because of the "account mix" category. If you have any other installment loans open, this should be a non-issue.

[RobertEG]

FICO has not, to my knowledge, ever formally stated whether they continue to include closed installment loans in their scoring of the category of credit mix.

Prior installment loans do show prior, effective use of different types, of credit, and could logically still be considred as showing of mix of credit, even though they are paid and closed.

Perhaps a call to Fair Isaac, asking that specific question?

To my knowledge, it remains an unanswered question.......

[Bankrupt2019]

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@RobertEG wrote:

FICO has not, to my knowledge, ever formally stated whether they continue to include closed installment loans in their scoring of the category of credit mix.

Prior installment loans do show prior, effective use of different types, of credit, and could logically still be considred as showing of mix of credit, even though they are paid and closed.

Perhaps a call to Fair Isaac, asking that specific question?

To my knowledge, it remains an unanswered question.......

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While FICO may have never formally stated whether they do or do not, it seems to be a recurring theme that closing your only installment loan results in a score drop.

[Anonymous]

It's also worth observing that FICO makes lots of different models.  If you were to have one or two closed car loans (24+ months of perfect payment history each) then I am sure that the "Auto Enhanced" models would take that as a substantial plus.  I say that not only because it seems intuitively obvious, but also because it's the only way I can make sense of my own scores.  The last time I did a full 3B myFICO report (with all the FICO flavors) my Auto Enhanced scores were far far higher than my "classic" scores -- my profile contained no open auto loans but did contain two closed auto loans with 36+ months of perfect payments.

[Thomas_Thumb]

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@Bankrupt2019 wrote:

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@RobertEG wrote:

FICO has not, to my knowledge, ever formally stated whether they continue to include closed installment loans in their scoring of the category of credit mix.

Prior installment loans do show prior, effective use of different types, of credit, and could logically still be considred as showing of mix of credit, even though they are paid and closed.

Perhaps a call to Fair Isaac, asking that specific question?

To my knowledge, it remains an unanswered question.......

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While FICO may have never formally stated whether they do or do not, it seems to be a recurring theme that closing your only installment loan results in a score drop.

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FWIW - On page 23 of Liz Weston's book: Your Credit score 4th edition she states -

"To get the highest possible scoresyou need to have both revolving debts like credit cards and installment debts like an auto loan, mortgage or personal loan. These latter loans don't still have to be open to influence your score. But they do need to still show up on your credit report".

Does this mean closed loans on file count toward mix - I think so although the above does not explicitly state mix.

Her acknowledgements include the following from Fair Isaac Corp:

Craig Watts

Ryan Sjoblad

Lamont Boyd

Barry Paperno

Later she lists John Ulzheimer who previously worked at Fair Isaac and Equifax