Understanding FICO® Scoring

[Fancyron]

Hello to all.  I have a question to the regulars.  Since my score has improved dramatically over the last 5 months, I decided to refinance my car.  I recently financed my car in Jan 07 at a very high interest rate.  After 6 monthly payments I am refinancing the vehicle at a much lower rate.  The question is: will my  score raise or drop or stay the same in the short term?  I know the factors are: credit being pulled from EQ, paying off an installment account after 6 months, opening up a new installment account with a much lower balance than the previous loan.   

[Tuscani]

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Fancyron wrote:

Hello to all.  I have a question to the regulars.  Since my score has improved dramatically over the last 5 months, I decided to refinance my car.  I recently financed my car in Jan 07 at a very high interest rate.  After 6 monthly payments I am refinancing the vehicle at a much lower rate.  The question is: will my  score raise or drop or stay the same in the short term?  I know the factors are: credit being pulled from EQ, paying off an installment account after 6 months, opening up a new installment account with a much lower balance than the previous loan.   

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My guess is you won't see much of a change (if any). And any potential drop in your scores should be short-lived.   

[Fancyron]

Thanks.  I thought it wouldnt make that big of an impact. 

[smallfry]

If you saved money on your car loan what does it matter what it does to your score in the short run? I refi'd a car I purchased last December a few days ago. I knocked off 6 payments on the life of the loan. Save 3K. What is the purpose of a higher FICO score? To obtain lending at better rates to save you money right? Well you just did that by refi'ing your car loan.

[Fancyron]

The only reason that matters is that I have also been looking at buying a house and trying my best to have my score as high as possible ASAP.

[smallfry]

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Fancyron wrote:

The only reason that matters is that I have also been looking at buying a house and trying my best to have my score as high as possible ASAP.

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Car and a house is a tough combo for FICO scoring. I don't think it will tank your score badly. You'll get the installment balance too high message but you were probably seeing that already. Easily explained to your mortgage broker. You saved money. You'll be fine. Good luck house hunting.

[Fancyron]

Thanks. I appreciate your encouragement.  In the meantime, I am doing my best to  drop my utilization down to less than 30%.  Almost there.

[fused]

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Fancyron wrote:

Thanks. I appreciate your encouragement.  In the meantime, I am doing my best to  drop my utilization down to less than 30%.  Almost there.

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Are you talking about revolving util? If so, 1-9% is best.