Installment "monthly payment" a factor?

[SouthJamaica]

I noticed that my Equifax report lists the "monthly payment" on an installment loan.

This particular loan was prematurely paid down so that I could pay a nominal amount for the next 58 months to pay it off, but of course the report lists the original monthly amount.

Questions:

1. Is this "monthly payment" a factor in FICO scoring?

2. If so, in which scoring models?

[Anonymous]

A related (but slightly different) question:

SouthJ's situation is fairly common around here:

      * An installment loan that has been paid down to a small balance early on

      * With the due date for the next payment being pushed back several years

      * And therefore possibly there may be $0 in actual payments for years

That means the DOLA (Date of Last Activity) could be a long time ago at some point.

Questions:

     * Is it possible that some scoring models regard a loan for which there's been no payments for a long time differently than one for which there is?

     * Does it therefore make sense (just as a CYA) to make a small quarterly payment ($1.01 say) on any loan?

My guess is that when trended data become more widely used then this will definitely be a smart thing to do.  But in principle even old models could measure this with the DOLA.

[Anonymous]

Good topic here.  Does DOLA take into account any interest added to the outstanding loan balance though?  Perhaps one hasn't made a payment in many months or even years, but if interest is causing the account balance to grow, thus causing a new balance to be reported to the bureaus, does that constitute "activity?" 

[Anonymous]

I found a definition of DOLA on Equifax a while back that clearly stated that, for an open account in good standing, the DOLA was the date of the last payment made to it.  It looks like EQ has moved the article since then and I can't find it.

Thus, a change in the balance (of the sort you describe) would not in itself trigger the DOLA to update.  (Assuming that article was correct.)

[Anonymous]

Of course, this article says something else!

https://www.creditrepaircloud.com/blog/understanding-the-date-of-last-activity

Here it explicitly says that your scenario of the balance slowly increasing by a few pennies each month does indeed cause the DOLA to update:

The Date of Last Activity listed on a client’s credit report is updated when one of three things happens on any active account: the consumer makes a payment, misses a payment, or the balance of the account increases.

[Anonymous]

Interesting. Definitely good to know and nice find on that reference! With the exception of a SSL, I can't think of too many examples where someone would pay ahead on a loan and then not pay for years. Take my auto loan, for example. Since I tend to over pay on it, my next payment isn't due until 2018 sometime. Naturally I disregard that and still pay it every month. I would think that most people in my position would continue to pay, since their goal clearly is to pay the thing off as evidenced by double payments or what have you. I suppose in the event of financial hardship having a security blanket of not having to pay a year or so would help and could be taken advantage of in that situation, but to me that would seem to be an exception not the rule.

[Anonymous]

The other good vehicle to pay ahead and then keep it open forever is a federal student loan.  I paid my 43k SL down to $50 and have kept it open for years.  Eventually they do force you pay it off, but when mine does close it will be 20 years old.  (And when it falls off my report it will be 30 years old.)

I opened a Share Secure loan at Alliant solely so I could capture all the steps involved for the writeup, but my installment utilization was already very low.  So I never got to see what kind of benefit I might get.

[Anonymous]

Gotcha.  Way to "take one for the team" to get some hands on experience with it before writing about the technique!

That student loan surely will have a nice impact on your AAoA once it's at the 30 year mark.  No doubt by that time though your AAoA will already be in the maximum FICO scoring zone though.  A little buffer is always a good thing, no doubt.

[Thomas_Thumb]

This from Equifax:

http://www.equifax.com/pdfs/corp/CIS-105-E_Consumer_User_Guide.PDF

http://www.equifax.com/assets/canada/english/consumer_credit_report_user_guide.pdf

[Anonymous]

So DLA by TTs linked definition above doesn't include a new balance being reported due to some interest growing the balance.  Seems we've got some inconsistency here between source data!