Installment tradeline utilization thread

[Anonymous]

Granted $500 shared secured five year loan from ACU

Here is the effect of the loan on FICO8 score when trade line first placed on credit reports. We will see how it goes.

The installment tradline has effected AAoA from 7.5 to 6.5 years and is a new tradeline with 100% installment utilization, which is my assumption of the -9 score drop.

Effect of new Installment Loan ACU shared secured $500 (60 months)

Installment reported on 10Nov2015

Credit Bureau	Start Score	Install. reported	Effect	Balance of Install.	Install. Loan UTI	CC Util.	Good Upcoming	Negative Upcoming
Equifax FICO8	802	793	-9	$500	100%	3.14%	Inq drop in Dec and Feb	Arp2016 13yr CC rolls off CR
Experian FICO8	796	787	-9	$500	100%	<1%	Inq drop in Feb	Arp2016 13yr CC rolls off CR
Transunion FICO8	801	792	-9	$500	100%	0.87%	Inq drop in Dec	Arp2016 13yr CC rolls off CR

Scoring information gathered from FICO 3 bureau credit monitoring service. Believe Experian monitoring inaccurate.

Credit card/Installment utilization and inquiry information gathered from Credit Karma for Equifax and TransUnion.

Here are additional scores, with no change. No sure 3B monitoring is calulating these or not.

Equifax Additional Scores	Fico 3B report 05Sep15	Installment reported 10Nov15	Experian Additional scores	Fico 3B report 05Sep15	Installment reported 10Nov15	Transunion Additional scores	Fico 3B report 05Sep15	Installment reported 10Nov15
EQ score 5	787	787	EX score 2	816	816	TU Score 4	779	779
EQ Auto Score 8	795	795	EX Auto Score 8	801	801	TU Auto Score 8	792	792
EQ Auto Score 5	806	806	EX Auto Score 2	805	805	TU Auto Score 4	781	781
EQ Bankcard 8	813	813	EX Bankcard 8	825	825	TU Bankcard 8	816	816
EQ Bankcard 5	808	808	EX Score 3	784	784	TU Bankcard 4	807	807
			EX Bankcard 2	822	822

Currently I have paid to 29.59% utilization on ACU loan, with next payment due 01/15/2019. What was the most effective balance percentage?? I can certainly go to 10% UTI if need be.

Update: I went ahead and paid the ACU loan down to 9.61% utilization.After reading earlier in this thread 30% UTI wasn't a break point. Will see what next months score effect is. Regardless, will keep the loan where it is till 12/2019, except for a payment of $1 once or twice a year.

[SouthJamaica]

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@manyquestions wrote:

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@SouthJamaica wrote:

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@oilcan12 wrote:

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@SouthJamaica wrote:

Took out a new $500 secured savings loan with Alliant Credit Union, paid off $400.

When it reported, it reported a new account with a $100 balance but did not report that it had been a $500 loan.

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What does your credit report show as the original amount of the loan?

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$500

But it shows credit limit and high balance as blank

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That's how it should look. Loans have an "original amount" and a balance.  

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OK Thanks for clarification

[damac2004]

i am new to all of this and am willing to be a test subject.  never had an auto loan or home loan.  just opened a prosper and lending club account a few months ago.  i have a handfull of credit cards that have had high utilization this past year while recovering from surgery.  im ready to repair my credit so i can move into another place early next year and buy my first new car.

i was hoping to make my credit profile look as good as possible to get into a rental.

i have started to pay off the credit cards and will pay all to 0 balance except a shell gas card with a few hundred $$$ balance.  i will use the other cards to show activity but will pay them in full when needed.  i can't pay the last card off until december 8th payment date, i have noticed myfico usually updated 7-10 days after that.

i have nothing on my record to drop off, etc.  no late payments, etc.

i have high balances on the prosper and lending club since im only a few payments in.  i don't believe prosper effected credit score, but lending club reporting did drop 8 points.

if all of you tell me what first step to take % balance wise i can do that for both loans once i get my cards finished off and report back.  would also be willing to do it in 2 stages since i don't need to move for a few months.

[SouthJamaica]

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@damac2004 wrote:

i am new to all of this and am willing to be a test subject.  never had an auto loan or home loan.  just opened a prosper and lending club account a few months ago.  i have a handfull of credit cards that have had high utilization this past year while recovering from surgery.  im ready to repair my credit so i can move into another place early next year and buy my first new car.

i was hoping to make my credit profile look as good as possible to get into a rental.

i have started to pay off the credit cards and will pay all to 0 balance except a shell gas card with a few hundred $$$ balance.  i will use the other cards to show activity but will pay them in full when needed.  i can't pay the last card off until december 8th payment date, i have noticed myfico usually updated 7-10 days after that.

i have nothing on my record to drop off, etc.  no late payments, etc.

i have high balances on the prosper and lending club since im only a few payments in.  i don't believe prosper effected credit score, but lending club reporting did drop 8 points.

if all of you tell me what first step to take % balance wise i can do that for both loans once i get my cards finished off and report back.  would also be willing to do it in 2 stages since i don't need to move for a few months.

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My suggestions:

1. Pay the credit cards down to zero.

2. Bear in mind that the statement balance is the one that reports; no need to show activity, just show lowest possible balance at statement cut.

3. In future try to avoid prosper and lending club since, if I'm not mistaken, they report as 'finance cos' which is a classification downgraded for some reason by FICO even when terms are excellent. For now, pay them down as fast as you can, but NOT to zero. (Once you go to zero you'll actually lose points because of FICO algorithm idiocy which in short term penalizes, rather than rewards, paying off an instalment loan. Once you've got your car and your new apartment then you can pay them down to zero.)

4. Apply for soft pull credit limit increases on your credit cards when you can, just because higher limits make for lower utilization. If you don't know which banks are soft pull, tell us which cards you have and we'll tell you what we know about them.

5. What this particular thread is about is a tactic that can probably pick up 10 points or so for you on your score. It's called the "reindeer game" (I have no idea why it's called the reindeer game). But you need a little more than $500 to play. What you do is: (a) open a $500+ savings account at Alliant Credit Union; (b) take out a secured loan against it for $500; (c) pay off most of the loan right away, before the end of the month; (d) your reports will show a new instalment loan with low utilization, which got me around 10 points temporarily [I say temporarily because I didn't really play the game, and paid the loan off completely, and my 10 points went away].

[jamie123]

The term "Reindeer Games" was originally brought to MyFICO forums by our esteemed member Revelate and this is what it means:

[SouthJamaica]

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@jamie123 wrote:

The term "Reindeer Games" was originally brought to MyFICO forums by our esteemed member Revelate and this is what it means:

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Wow. Thank you jamie123 That gets my vote for the best entry on MyFICO Forums to date Many kudoes to you. And to Revelate

[Revelate]

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@SouthJamaica wrote:

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@jamie123 wrote:

The term "Reindeer Games" was originally brought to MyFICO forums by our esteemed member Revelate and this is what it means:

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Wow. Thank you jamie123 That gets my vote for the best entry on MyFICO Forums to date Many kudoes to you. And to Revelate

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Grin, glad I amused!

[Anonymous]

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@Revelate wrote:

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@Anonymous-own-fico wrote:

Haha, it looks like iv (new mortgage, HELOC, credit card) and I (new mortgage, secured loan, credit card) are in a lot of trouble then. We are still digesting the first blow from the one-two punch, which was that "jamie made a compelling argument that it wasn't possible under a FICO 8 model to hit an 850 with an account under 2 years of age". I was just getting used to the AAoA being the lifeline to restore us to 850, and now you two rascals have pulled the rug from under the Christmas tree!

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Laugh!

Well I got on this because in my own little world I had 4 installment lines open on my report, my auto loan closed and I took a hit, and then my original secured loan closed and I took another hit.  That sucked.

What I'm hoping to get out of this data over time is a better way for score optimization: I think we're all pretty sold on the fact you should have some installment lines on your report, but what if the best method is to get not only the smallest but the longest time period loan you can (I'm looking at you DCU!), immediately pay it to X% for an even better boost and then let it coast?

For that matter can this calculation be on one installment loan or do you need two?  Lot of good stuff can come out of this analysis I think.

I've realized I don't care for my USAA secured loan, wasn't as smart as possible opening that the last time around so I'm playing some games with it now on the way to paying it and closing the underlying CD.  It's also possible that a mortgage may be counted outside of that altogether... the reasons stated on scorecards don't matter much but I've seen a mix of "non-mortgage installment" and "combination of mortgage and non-mortgage" in various places; I should go look at that again.

Course now that I'm in process of a mortgage I should be able to test that too... rationally mortgages should be held seperate, the dollar values of them would dwarf even auto loans from a calculation perspective and the vast majority of UW I would suspect absolutely count it as a different asset class.  If it doesn't, well that'll bring my testing to a close tout suite, can't afford to prepay that appreciably heh, and that's a useful datapoint too in several regards.  

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In reviewing this post and others ... my best spot for an installment loan is right about 35% outstading balance (yes I have played with this in the credit bureaus to see what the effects were for me - by paying down loans and then what happens with new loans) and the mortgage is not effecting that. Related to the mortgage, I get wrapped that my loan balance is to low ($105K) and should be higher. In relation to credit cards the credit analysis says my credit limits are to low. Hmm ... guess my 838 out of 850 FICO Score would surge ahead if I corrected all my deficiencies

[Anonymous]

I think I have an update.

Fico 3B monitoring updated in the last couple of days for TU and EQ. I thought it was a glitch when I gained 40 points with TU. Then EQ shot up 41 points. I had one inquiry drop off both reports this month as well. The FICO alerts indicate the increase for no reason or because of balance decrease, but there is no way I would get 40 point increase going from 3% to 2% credit card utilization.

I can not account for the increase other than the installment loan which is now at 9% utilization.

I will probably purchase a 3B report in a week or so just to verify, So I hope I am not being premature.

Fico 3B monitoring updated on TU and EQ the last few days and here are my results

Effect of new Installment Loan ACU shared secured $500 (60 months)
Credit Bureau	Start Score	Install. Reported 10Nov2015	Effect 10Nov	Scores Fico monitoring 10Dec2015	Effect 10Dec	Balance of Loan	Install. Loan Util.	CC Util.	Good Upcoming
EQ FICO8	802	793	-9	839	+41	$45	9%	1.00%	Inq drop in Dec and Feb
EX FICO8	796	787	-9	817	+30	$45	9%	1	Inq drop in Feb
TU FICO8	801	792	-9	835	+40	$45	9%	1.00%	Inq drop in Dec
Scoring information gathered from FICO 3 bureau credit monitoring service. Believe Experian  monitoring inaccurate.
Credit card/Installment utilization and inquiry information gathered from Credit Karma for Equifax and TransUnion .

 To summerize:

1. I had no active Installment tradeline. Only one nine year closed auto loan. My begining scores were in the 800 range.

2. Took out $500 Alliant secured loan, let it report on credit reports on Nov10.

3. Payed ahead till I owed $45 on loan and next payment is 12/2019.

4. Next loan reported to CRA on Dec10 indicating low utilization or mostly paid installement loan.

5. Accounting for one inquiry dropping off two credit reports and perhaps a small decrease in total UTI. I would speculate a minium of 21 to 30 point gain in my case on FICO8. Other FICO scores increased as well.

This is a solid strategy for those with no existing installment loan to increase score and perhaps, depending on current score, pushing your score higher allowing qualification at a lower interest rate.

Revelate/Jamie, Thanks for the research and shedding light on this approach. Amazing work!!!

[jamie123]

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@Anonymous wrote:

 To summerize:

1. I had no active Installment tradeline. Only one nine year closed auto loan. My begining scores were in the 800 range.

2. Took out $500 Alliant secured loan, let it report on credit reports on Nov10.

3. Payed ahead till I owed $45 on loan and next payment is 12/2019.

4. Next loan reported to CRA on Dec10 indicating low utilization or mostly paid installement loan.

5. Accounting for one inquiry dropping off two credit reports and perhaps a small decrease in total UTI. I would speculate a minium of 21 to 30 point gain in my case on FICO8. Other FICO scores increased as well.

This is a solid strategy for those with no existing installment loan to increase score and perhaps, depending on current score, pushing your score higher allowing qualification at a lower interest rate.

Revelate/Jamie, Thanks for the research and shedding light on this approach. Amazing work!!!

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That is great news!!!!

That is some rock solid data that proves this is a valid score boosting technique! Thanks for the update slimshady66!

Now we have to get the word out:

You need a minimum of 3 credit cards AND a $500 installment loan that you pay down to a $45 remaining balance with the first payment if you want the highest scores possible.