04-18-2013 02:38 PM
After doing some research, it looked like it would be beneficial to my credit score to get the balance on an installment loan to be less than 50% of the original loan amount. So, I made a payment to get the principal less than 50% of the original amount. My scores didn't really seem to change one way or the other.
On the other hand, when I made a similar payment on a credit card to get it under 50%, my scores went up by a notable amount.
So, I guess that you don't get as much "bang for the buck" with an installment loan payment. Does that make sense?
It's all good - paying down balances is a good thing making me a much more relaxed person, but I was just curious about the score implications.
04-18-2013 04:37 PM - edited 04-18-2013 04:37 PM
Revolving util far outweighs installment util. In fact, installment util is a teeny tiny part of FICO scoring. The only experience I had was paying off a car note from 25% to 0%. I saw a gain on EQ, but I think most of that was due to adding another $0 balance.
ETA....and I'll add that this is a good thing. If you add a $500k mortgage you won't see a large score ding for staying at or near 100% util while the balance slowly goes down.
04-18-2013 04:59 PM
Thanks for the response. So, if I were to pay off the installment loan, I might get a bump in my score, but it would be more from adding a zero balance than anything else. Also, how much of a bump is it? Minor?
I find the whole process fascinating. It is like trying to decipher a mystery.