Reply
Valued Contributor
my-own-fico
Posts: 1,300
Registered: ‎01-05-2010
0

Installment and revolving accounts

[ Edited ]

If there's one thing that's been hammered over and over again, it is that installment loans never ever make up a difference of more than a couple of points on your FICO score.

If someone zeros his last credit card and it turns out he gets a reason code of 33 (The remaining balance on your non-mortgage installment loans is too high) and his score drops 32 points, you can be sure that without fail every advice given to him is that not having at least one credit card with a balance is the culprit, the whole culprit and nothing but the culprit, so help me God.

There is of course a lot to be said for showing responsible use of credit cards, but it's unlikely your score would drop as much as 32 points going from one balance to zero. I have experienced near 20 points, but can't imagine more than a couple of points beyond that. Is it really so far-fetched to think, earthquakes, dust storms and rebucketing included, that a reason code of 33 can contribute somewhere in the neighborhood of 15 points?

This morning the one reported balance on my credit cards dropped from $1000 to $10. My EQ FICO dropped from 817 to 802. I don't think I have ever seen a clearer case of rebucketing. The only other reason code in the report besides the 33 was an 11 (The amount owed on your revolving accounts is too high); the remaining two were both a 0 (Not Reported). I am puzzled by which accounts the 11 is hinting at, so that's my question. After all, an installment account (or a mortgage) doesn't revolve with a different payment each month.

Are you living within your means?
Moderator
Revelate
Posts: 9,732
Registered: ‎12-30-2011
0

Re: Installment and revolving accounts

[ Edited ]

I'm not certain I agree with your estimation of rebucketing.

 

If you let the original balance report next month and the score immediately returns, that's probably just revolving utilization though admittedly it seems a little silly in this case.  If it stays at that lower score, then that may well be rebucketing.  There's reports elsewhere that have revolving utilization as being bucketable and I tend to think they're as accurate as can be from anecdotal data.  Also from the same source, it surely does look at number of revolving tradelines reporting a balance is a fairly substantial chunk too.

 

I'm not certain what you're driving at here either; we know for certain installment loan balances aren't factored anywhere close to what credit card ones are; however, that doesn't mean they're not factored at all and I don't think anyone's said that (admittedly I don't read this particular board as closely as others so I may have missed some).  Also the higher you go (and 800+ is gold plated absolutely) the more any even wayward negative FICO can find is going to hit harder.  In my case ~650, it'd likely be in the 2-7 point range at a complete SWAG.

 

I'm the first to admit I don't know everything about FICO, and that goes for everyone else who posts on this board (there may be some internal Fair Issac insiders reading and possibly even laughing at some of our assumptions, but they're not going to set us straight).  This is a community sharing information as we know it; as more information becomes available either anecdotally or via the snippets Fair Issac drops here or there, our knowledge base improves. 

 

End of the day as another user of this forum, I appreciate your thoughts and insights (you specifically even); however, taking a backhanded slap at other posters, isn't enormously productive.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


Take the myFICO Fitness Challenge
Valued Contributor
tcbofade
Posts: 2,512
Registered: ‎09-26-2011
0

Re: Installment and revolving accounts


my-own-fico wrote:

If there's one thing that's been hammered over and over again, it is that installment loans never ever make up a difference of more than a couple of points on your FICO score.



Hmmm.  Somehow, I've missed this tid bit.

 

One thing I learned (the hard way) is that having three installment loans on your CR is seen as a negative and costs you points.

 

(One is nearly paid off, less than 30% remaining, two are pretty new...)


Current Scores: EX 694 (FCR) TU08: 650 Wally. 12/10/14
Last app 05/29/2014.
Being held hostage in the garden until 06 January 2015!
Zero percent financing is where the devil lives...
Valued Contributor
thom02099
Posts: 1,348
Registered: ‎08-30-2011
0

Re: Installment and revolving accounts


tcbofade wrote:

my-own-fico wrote:

If there's one thing that's been hammered over and over again, it is that installment loans never ever make up a difference of more than a couple of points on your FICO score.



Hmmm.  Somehow, I've missed this tid bit.

 

One thing I learned (the hard way) is that having three installment loans on your CR is seen as a negative and costs you points.

 

(One is nearly paid off, less than 30% remaining, two are pretty new...)


And having more than 3 installment loans will definitely have an impact.  Had 4 reporting at one time and when one paid off and reported, got a bit of a score bump, when it was only 3.  Seems that 2 is the optimal number. 

Diners Club Premier MasterCard $50K / AMEX Gold NPSL / AMEX Zync NPSL / AMEX Blue Cash Preferred $14K / Bank of America Cash Rewards Signature Visa $15K / Merrill Lynch Plus Signature Visa $15K / Wells Fargo Propel 365 $15K / Chase Sapphire Preferred Signature Visa $10K / J P Morgan Select Signature Visa $10K / Chase Slate Visa $6K / CITI Diamond Preferred MasterCard $13.2K / Discover IT $10.5K / IberiaBank Select Visa $8K / 1st Command Bank Platinum Visa $7.5K // Home Depot $9.7K / Lowes $10K

EX = 799 EQ = 812 TU = 811 - 11/2014

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}