@SouthJamaica wrote:10-5-16
50% & 40% Thresholds tested.
Effect on FICO 8 scores of paying down car loan, reducing overall installment loan utilization from 58.4% to 39%:
EQ (not available) TU 779 +-0 EX 768 +2
Not much of a bump.
History:
Auto loan reporting with overall installment utilization 87.7%: EQ -30 TU -41 EX -20
Crossing 80% (from 87.7% to 79.1%) : +2 in each: EQ, TU, and EX
Crossing 70% (from 79.1% to 68.8%) : +3 in EQ, +8 in TU, no change in EX
Crossing 60% (from 68.8% to 58.4%): no changeSo by paying the installment loans down from 87.7% to 39%, I got back
(a) 4 of the 20 points I'd initially lost in EX
(b) 10 of the 41 points I'd lost in TU, and
(c) [probably 7] of the 30 points I'd lost in EQ.
Next step is crossing 30%; I'm wondering if 30% has significance in the installment
loan calculation, the way it clearly does in revolving credit.
And I'm also considering skipping 30% and 20% altogether, and going to the promised land of 9%.
I don't like having my scores depressed.
SJ - As I recall, you had a mostly paid down but open SSL prior to taking the Auto loan - yes?
If so, it looks like the "optimization points" from the SSL were neutralized by the larger Auto loan. This would be in agreement with expectations based on an aggregate installment B/L ratio as a Fico 08 scoring factor. If you had already closed your SSL, the initial score drops for the auto loan seem a bit harsh.
I look forward to seeing what happens when you reduce the Auto loan to 9%. Do you still have the SSL and if so will you be keeping it and paying off the auto loan as a final test?
Interestingly, your realized score drop was "in the ballpark" of the simulation estimate.
Previously I ran a simulation on adding an Auto loan but, my score did not drop. I do have a sizeable open mortgage currently around 32% B/L so the auto loan would have an insignificant impact on B/L when aggregated.
@Thomas_Thumb wrote:
@SouthJamaica wrote:10-5-16
50% & 40% Thresholds tested.
Effect on FICO 8 scores of paying down car loan, reducing overall installment loan utilization from 58.4% to 39%:
EQ (not available) TU 779 +-0 EX 768 +2
Not much of a bump.
History:
Auto loan reporting with overall installment utilization 87.7%: EQ -30 TU -41 EX -20
Crossing 80% (from 87.7% to 79.1%) : +2 in each: EQ, TU, and EX
Crossing 70% (from 79.1% to 68.8%) : +3 in EQ, +8 in TU, no change in EX
Crossing 60% (from 68.8% to 58.4%): no changeSo by paying the installment loans down from 87.7% to 39%, I got back
(a) 4 of the 20 points I'd initially lost in EX
(b) 10 of the 41 points I'd lost in TU, and
(c) [probably 7] of the 30 points I'd lost in EQ.
Next step is crossing 30%; I'm wondering if 30% has significance in the installment
loan calculation, the way it clearly does in revolving credit.
And I'm also considering skipping 30% and 20% altogether, and going to the promised land of 9%.
I don't like having my scores depressed.SJ - As I recall, you had a mostly paid down but open SSL prior to taking the Auto loan - yes?
Correct
If so, it looks like the "optimization points" from the SSL were neutralized by the larger Auto loan.
Agreed
This would be in agreement with expectations based on an aggregate installment B/L ratio as a Fico 08 scoring factor.
Agreed
If you had already closed your SSL, the initial score drops for the auto loan seem a bit harsh.
I look forward to seeing what happens when you reduce the Auto loan to 9%.
Me too. So much so that I feel impatient about testing 30 & 20%, and am thinking of just dropping it down to 9%
Do you still have the SSL
Yes
and if so will you be keeping it
Absolutely. It's my FICO score insurance policy
and paying off the auto loan as a final test?
Actually I may not go that far; I may just hang on to it for awhile.
Interestingly, your realized score drop was "in the ballpark" of the simulation estimate.
Agreed, the simulator did an excellent job in predicting that
Previously I ran a simulation on adding an Auto loan but, my score did not drop. I do have a sizeable open mortgage currently around 32% B/L so the auto loan would have an insignificant impact on B/L when aggregated.
Good to know
Just noticed something interesting. The "reason code" I was getting, that my usage of loans was too high, is now gone. So by crossing the 50% & 40% lines, I did manage to shed that problem.
Now the only negative reason code is that my credit history is too short.
If I could stop applying for things I could fix that. But that's a big if.
@Thomas_Thumb wrote:
@SouthJamaica wrote:Just noticed something interesting. The "reason code" I was getting, that my usage of loans was too high, is now gone. So by crossing the 50% & 40% lines, I did manage to shed that problem.
Now the only negative reason code is that my credit history is too short.
If I could stop applying for things I could fix that. But that's a big if.
I've seen that type of statement before.
I suspected it related to age of oldest installment loans - not AAoA or age of oldest account. There are a couple reason codes as follows:
1) Length of time installment loans have been established
2) Length of time open installment loans have been established.
I don't think it's related to age.
You may not recall this but I was going nuts a while back when, after playing the "reindeer game", I dropped my SSL to 15.6%, or $78, and got that exact reason code, that the amount of my loan balances was too high. I couldn't imagine how they could consider 15%, or $78, high. The total amount of my loan balances was $78.
But Revelate assured me that I just had to take the next step and go below 10% and I'd be fine. Sure enough I transferred the $33 needed to go from 15.6% to 9%, and the next month my loan usage was no longer fodder for the FICO reason codes 
This time I was spared after getting below 40%.
The why of that is what remains unclear.
11-5-16
Tested 10%
Paid enough of my car loan down so that my
aggregate installment utilization went from 39% to 9%
Effect on FICO 8 scores:
EQ +24 TU +24 EX +20
History:
Auto loan reporting with overall installment utilization 87.7%: EQ -30 TU -41 EX -20
Crossing 80% (from 87.7% to 79.1%) : EQ +2 TU +2 EX +2
Crossing 70% (from 79.1% to 68.8%) : EQ +3 TU +8 EX +-0
Crossing 60% (from 68.8% to 58.4%): EQ +-0 TU +-0 EX +-0
Crossing 50% & 40% (58.4% to 39%): EQ +2 TU +-0 EX +2
Conclusion:
So it appears that by paying the installment loans down from 87.7% to 9%, I got back
(a) all of the 20 points I'd initially lost in EX, plus 4 additional points
(b) 34 of the 41 points I'd lost in TU, and
(c) all of the 30 points I'd lost in EQ, plus 1 additional point.
(These results might be skewered by the fact that during this 6 month period
I ascended a scorecard in all 3 bureaus.)
Now the question becomes: do I pay off the auto loan altogether, and test whether
my little share secured loan can carry the burden of installment loans in my "credit mix"
all by itself? Or do I downshift to slow gear in paying off the auto loan and keep it around
for awhile?
@Thomas_Thumb wrote:SJ - Thanks for the updates
My primary takeaway from this is if you have an open SS loan, adding another type of installment loan does not add to mix from a Fico scoring perspective. In fact, it will hurt if score if the SS loan is optimized for balance to loan ratio (under 10%). Likewise, if one has an open mortgage or car loan, adding a small SSL - even if paid down to optimize provides no scoring benefit.
- As I recall, Revelate experienced this when he added a mortgage - it wiped out the points associated with a trivial SS loan because installment B/L is looked at in aggregate.
I continue to believe B/L aggregate threshold(s) are at different levels when a mortgage is part of the mix based on data from Inverse and my own experience. Why? Because Fico 08 scores of 850 have been realized with aggregate B/L in the 60% to 70% range.
1. So your prediction is that the paying off of the 9% auto loan would have no effect in view of the presence of the 7.5% SSL?
2. Would it be worth testing?
@Thomas_Thumb wrote:
@SouthJamaica wrote:
@Thomas_Thumb wrote:SJ - Thanks for the updates
My primary takeaway from this is if you have an open SS loan, adding another type of installment loan does not add to mix from a Fico scoring perspective. In fact, it will hurt if score if the SS loan is optimized for balance to loan ratio (under 10%). Likewise, if one has an open mortgage or car loan, adding a small SSL - even if paid down to optimize provides no scoring benefit.
- As I recall, Revelate experienced this when he added a mortgage - it wiped out the points associated with a trivial SS loan because installment B/L is looked at in aggregate.
I continue to believe B/L aggregate threshold(s) are at different levels when a mortgage is part of the mix based on data from Inverse and my own experience. Why? Because Fico 08 scores of 850 have been realized with aggregate B/L in the 60% to 70% range.
1. So your prediction is that the paying off of the 9% auto loan would have no effect in view of the presence of the 7.5% SSL?
2. Would it be worth testing?
My prediction would be no score change but, as we know, other "noise factors" could come into play.
Is it worth testing? Yes, I think so. The risk of negatively impacting score due to pay off is small.
On the flop side, keeping the loan for a couple years may be a positive for showing reliable payment history over time. If you already have a few multi year recently closed loans, then really no benefit to prolonging pay off. However, if those loans were closed 8 or 9 years ago, then they will fall off your report and maintaining the Auto loan could prove useful.
Do what's best for your credit history.
No multi-year closed loans show up any more.
Maybe I'll just pay it off since it's nice to have a clean title.
And then we'll know if the miraculous little SSL can carry the credit mix burden on its own.
And if I lose points, it's no big deal. I shouldn't be applying for anything any way