Understanding FICO® Scoring

[Jay1987]

Do these count against you when scoring as in balance owed, etc?

"Your FICO score considers how much you owe on your credit accounts, such as revolving credit accountsand non-mortgage installment loans. Generally, the more you owe on these accounts, the greater risk you pose to lenders. "

The only installment loan I have is my car loan. I was under the impression as long as it was paid on time, that the balance wouldn't have a negative impact on my score... Am I wrong with this?

[Tuscani]

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Jay1987 wrote:

Do these count against you when scoring as in balance owed, etc?

"Your FICO score considers how much you owe on your credit accounts, such as revolving credit accountsand non-mortgage installment loans. Generally, the more you owe on these accounts, the greater risk you pose to lenders. "

The only installment loan I have is my car loan. I was under the impression as long as it was paid on time, that the balance wouldn't have a negative impact on my score... Am I wrong with this?

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 Installment balances are no where near as important as revolving credit.

[Red14]

I ran all 3 reports.  I have a home equity loan and EQ and TU have it listed under "mortgages" EX has it listed under an "installment" loan.    EX gave me the bigger fico score and I'm wondering if that has anything to do with it.   I thought a mortgage loan would have a bigger impact on Fico Score than an installment loan.  Do you think I should have all 3 CR reflect the same type of loan/mortgage for this equity loan.  Would it make a difference or is that the CRA's call on how it lists my credit?

[Viking]

I am testing the FICO formula by removing old accounts...

Today's episode...Yesterday, I went from 801 to 795 on EQ because an installment loan that I opened on 1/1998 and closed on 2/1998 was removed from my report. Yes, this loan is one of those car dealer hostage situations. No other action occured on my report that day. This leaves me with only one installment loan on my report. The one remaining was opened on 2/1998 and paid off on 2001. I moved the car dealer loan to my bank.

I can only conclude one should leave all good standing installment loans on your report for as long as possible. Do not worry if they are only 1 month in duration (age). Apparently averaging is not used for installment loans.

This is the opposite experience I had with a revolving MBNA credit card.  The MBNA card was opened and closed for a month back in 2002. When I asked EQ to verify the ownership and they could not, my FICO score went up 9 point. Again no other action on my report. As such, I conclude you should try to remove revolving credit cards with short average ages that are closed. My guess is these cause your average age score to go down.

Message Edited by Viking on 09-22-2007 06:17 AM

Message Edited by Viking on 09-22-2007 06:18 AM

Message Edited by Viking on 09-22-2007 06:19 AM