HELP!!! Need 10 points on my Experian Report

[Anonymous]

I have been working on cleaning up my report and rebuilding my credit. I have all collections closed or removed from my reports, all my credit cards a reporting a $0 with one having a balance of $6. I have a revolving loan just to have the mix of different credit. This is the newest account I have and it is sitting at $4300 open balance on a $5000 loan. I need 10 more points on my Experian to get the mortgage loan I want how can I do this? I was considering paying the loan off but then I lose that type of credit in my credit mix. Has anyone tried paying down a loan but still keeping a balance on it so it is still open? Would paying off 95% of the loan bring my score up? I currently have 3 credit cards with $6.31 open against $2,400 in credit so that is a 0.01% usage i cannot increase any of their limits because i have high risk cards and they do not allow limit increase with in a time frame and all of mine were increase over the summer.  Would opening another credit card account work?

Please any advice would be great!!

Thank you Everyone, to answer a few questions:

The loan i have is a personal loan and thankfully being reported monthly in a timely manner, this loan is with a credit union and I have it just to have a mix of different credit out there to rebuild.

I do not have any car payments or any other loans types.

I do only have 4 active accounts right now and I no that is not that many to work with but i don’t want to push myself with others right now.

My credit cards are high risk like I said so they are all high interest rates.

Personal Loan= $4300/$5000 only been active for 4 months

Credit Card1= $6/$500 been open now 14 months

Credit Card 2= $0/$600 open a year

Credit Card 3= $0/1300 open 6 months in February

I am going to pay my loan down to a balance of $445.00 and hopefully gain the 10 points+ that i need! I will let you know how that works in February when they report again!

Thank you everyone for your help, this was my first time on here and I am very new to working up good credit. (I was great a getting a ton of bad credit/debt in my teens and early 20's)

[Anonymous]

Would paying off 95% of the loan bring my score up?

Yes. In fact, you may not need to pay 95%. Paying 70% would probably get you the 10 points you need. No guarantees, though.

[Anonymous]

EX98 (the EX mortgage score) responds very well to paying down balances on your installment loans.

Pay as much of your installment loan as you can without paying it off before it reports again.

Also note, my installment loans tend to lag one month behind on reporting, not sure if it is that way for everyone.

[Thomas_Thumb]

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@Anonymous wrote:

Would paying off 95% of the loan bring my score up?

Yes. In fact, you may not need to pay 95%. Paying 70% would probably get you the 10 points you need. No guarantees, though.

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Not sure how a revolving loan is accounted for relative to an installment loan or revolving credit card utilization.

CAPTOOL - based on loan data you previously posted, I seen to recall you were able to pick up more than 10 points by getting aggregate loan balance down to around 66-68%. If OP's loan works the same way, getting the loan down to 60% may be enough.

If the revolving loan behaves like CC UT%, then bringing balance to under 30%, as you suggest, should do the trick.

OP - If you have time, taking a 2 step paydown approach might be worth considering. If you need to maximize points ASAP, a 95% paydown certainly will drop your debt to credit ratio below whatever score penalty thresholds might exist.

[Anonymous]

Thom Thumb picked up on a crucial point, which is that much of the testing that has been done here on the forum in this area is on installment loans.  The OP says that he has a revolving loan.

OP, if I were you, I'd pay your loan down to $445, which will be 8.9%.  Based on the work that others did last year, there appears to be no advantage to paying any loan lower than that and you don't want to run the risk of the loan paying off before you own your new home.

OP, can you confirm that you have no installment loans?  (No car loans, student loans, personal loans, etc.)

Question to TT and others:

To my mind this loan is either being treated as revolving debt or installment debt.  Seems impossible to me that it could be having no impact on either one.

If FICO is treating it as revolving debt, then the OP's revolving utilization is quite high (even though his cards have an ultralow balance).  And thus paying it down will have a big benefit (by bringing his revolving U to under 8.9%).

If FICO is treating it like an installment loan, then paying it down to 8.9% will help for the usual reasons associated with paying down (but not off) installment debt.

Either way he's likely to get a win out of paying it down.  Does this line of thinking seem plausible?

[Thomas_Thumb]

If the loan is some type of revolving credit balance with a minimum monthly payment, I would anticipate it may be part of an aggregate utilization calculation. Assuming that is the case:

1) overall revolving CL = 2400 + 5000 = 7400

2) overall balance = 6 + 4300 = 4306

3) current AG UT would then be = 4306/7400 = 58%. 

4) current account UT = 4300/5000 = 86% 

Either way, dropping balance on the loan to under $1500 (30%) should be enough to gain the desired 10 points - IMO. However, certainly no harm in paying down more to maximize results.

[Anonymous]

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@Thomas_Thumb wrote:

If the loan is some type of revolving credit balance with a minimum monthly payment, I would anticipate it may be part of an aggregate utilization calculation. Assuming that is the case:

1) overall revolving CL = 2400 + 5000 = 7400

2) overall balance = 6 + 4300 = 4306

3) current AG UT would then be = 4306/7400 = 58%. 

4) current account UT = 4300/5000 = 86% 

Either way, dropping balance on the loan to under $1500 (30%) should be enough to gain the desired 10 points - IMO. However, certainly no harm in paying down more to maximize results.

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Yup, that's what I was saying.  If FICO is viewing it as revolving, then the OP's revolving utilization is actually fairly high (58%).  It's not the 1% he thinks it is.

But whether FICO views it as revolving debt or an installment loan, the OP should get a big boost out of paying it down (just for different reasons).

It would be useful for the OP to confirm that he has no other loans of any kind.  No car loans, student loans, etc.

[Anonymous]

Nothing to add other than to say this is riveting stuff.  I'm seriously sitting here eating popcorn while I read it. I love this forum. OP please update your thread  when you can and let us know if it worked out.