@Revelate wrote:
@jamie123 wrote:I'm kinda refining my installment loan strategy and perhaps how I advise people about installment loans.
1. Everyone should have installment loan history on their reports. If you don't have an installment loan on your reports, you need to open at least one and maybe two share secured loans with a CU like Alliant or SDFCU. This is especially needed for someone that is new to credit or has a thin file. The open installment loan will boost their FICO 08 scores after a few months which would qualify them for better CCs earlier in their credit building process.
2. I don't feel that once your credit is established and that you have at least one closed installment loan on your reports and have all the credit cards that you need, that you need an open installment loan. From reading these forums it appears that an open installment loan only affects the FICO 08 score. When applying for an auto loan or mortgage the lenders will be pulling FICO 04 and FICO auto enhanced scores that don't seem to be affected by having an OPEN installment loan.
So it boils down to:
- Looking to boost scores for the next shiny new credit card = open installment loan.
- Looking for an auto loan or mortgage and have a closed installment loan on your reports = open installment loan not needed.
I don't think you can include Auto Enhanced in as being known whether open installment lines help or not; I suspect that they very much do on FICO 8 Auto Enhanced as typically industry options just change the weighting of tradelines, and presumably the base underlying assumption that open accounts are more predictive than closed ones that FICO 8 appears to have would hold in all industry options.
Agreed that for current mortgage markets it might be mostly moot, but I think most of the testers have an open installment loan anyway; we have had numerous reports of drops when installment loans closed for FICO '04 when Scorewatch was still on the Beacon 5.0 model, but they were nowhere near as substantial as the significant drops we've seen in FICO 8 for them.
I don't think I'll be changing my own personal advice that you should have an open installment loan regardless: the costs for doing so are so trivial anyway, comparable to checking a report / score, vs. the money that we waste all the time anyway. I spend more taking a date out to a comparitively cheap restaurant than I would for the interest paid on the entirety of my 5 year Alliant secured loan... need to keep the costs in perspective.
Maybe should have two reporting as the old data found, I still had 3 open when my auto loan closed and my Beacon 5.0 (a mortgage score) didn't move one iota. May not matter in all cases, but in my case where I'm a hairsbreadth away from falling down to a much worse mortgage tier, 2-3 points absolutely matters.
Expensive date 
@ArmyVietVet wrote:
@Revelate wrote:
@jamie123 wrote:I'm kinda refining my installment loan strategy and perhaps how I advise people about installment loans.
1. Everyone should have installment loan history on their reports. If you don't have an installment loan on your reports, you need to open at least one and maybe two share secured loans with a CU like Alliant or SDFCU. This is especially needed for someone that is new to credit or has a thin file. The open installment loan will boost their FICO 08 scores after a few months which would qualify them for better CCs earlier in their credit building process.
2. I don't feel that once your credit is established and that you have at least one closed installment loan on your reports and have all the credit cards that you need, that you need an open installment loan. From reading these forums it appears that an open installment loan only affects the FICO 08 score. When applying for an auto loan or mortgage the lenders will be pulling FICO 04 and FICO auto enhanced scores that don't seem to be affected by having an OPEN installment loan.
So it boils down to:
- Looking to boost scores for the next shiny new credit card = open installment loan.
- Looking for an auto loan or mortgage and have a closed installment loan on your reports = open installment loan not needed.
I don't think you can include Auto Enhanced in as being known whether open installment lines help or not; I suspect that they very much do on FICO 8 Auto Enhanced as typically industry options just change the weighting of tradelines, and presumably the base underlying assumption that open accounts are more predictive than closed ones that FICO 8 appears to have would hold in all industry options.
Agreed that for current mortgage markets it might be mostly moot, but I think most of the testers have an open installment loan anyway; we have had numerous reports of drops when installment loans closed for FICO '04 when Scorewatch was still on the Beacon 5.0 model, but they were nowhere near as substantial as the significant drops we've seen in FICO 8 for them.
I don't think I'll be changing my own personal advice that you should have an open installment loan regardless: the costs for doing so are so trivial anyway, comparable to checking a report / score, vs. the money that we waste all the time anyway. I spend more taking a date out to a comparitively cheap restaurant than I would for the interest paid on the entirety of my 5 year Alliant secured loan... need to keep the costs in perspective.
Maybe should have two reporting as the old data found, I still had 3 open when my auto loan closed and my Beacon 5.0 (a mortgage score) didn't move one iota. May not matter in all cases, but in my case where I'm a hairsbreadth away from falling down to a much worse mortgage tier, 2-3 points absolutely matters.
Expensive date
$20/person isn't that expensive at a restaurant where the entrees are $13+ and that's if you're not ordering drinks; not taking a date to a $10/person place generally 
. $36 dollars in interest for that 5 year Alliant loan IIRC, was less than two yuppie foodstamps.
@TRC_WA wrote:
@Revelate wrote:
@TRC_WA wrote:
@Revelate wrote:Vehicle loans unfortunately are apparently muy bueno under FICO 8; I took an 18 point drop when my auto loan closed and I had other installment loans though they're reporting as OTHER on Equifax. Not certain that makes a difference or not. My score hasn't recovered even with several card balances paid off and held constant, so I'm assuming the drop from 708 to 690 was explicitly the car loan being paid.
Not happy but that's the breaks I guess. My Beacon 5.0 didn't budge an inch, so I think FICO 8 might be counting stuff a little differently at least on Equifax.
I'll let you know what happens when my trade in reports as paid and my new auto loan hits the CR...
Actually I'm really looking forward to seeing that information! I don't think it mattered under earlier versions but we've always theorized there were different strata of installment loans and this may be pretty good proof of that.
I will definitely let you know!
On a side note, I had a 5k Lending Club personal loan hit my reports last week... TU went up 3 points... EQ and EX didn't move. TU seems a bit weird... I gain points with reasons being "your total retail CC balance has decreased" but I never see reasons like that from EQ and EX.
The Lending Club loan reports as installment and I also have 5 Sallie Mae turned Navient student loans in addition to the new/old car loans that are about to be added/updated.
@Anonymous wrote:My credit score didn't change at all when my new auto loan reported in December, but just took a 19 point hit on EQ and a 15 point hit on EX when the payoff of my old auto loan showed up. Makes no sense.
Just to update my earlier posts... my previous auto loan ($16k) has reported as paid. My new auto loan ($44k) just hit 2 of my reports... EQ reported no change in FICO score.
EX reported a 6 point gain.
No report yet from TU.
@TRC_WA wrote:
@TRC_WA wrote:
@Revelate wrote:
@TRC_WA wrote:
@Revelate wrote:Vehicle loans unfortunately are apparently muy bueno under FICO 8; I took an 18 point drop when my auto loan closed and I had other installment loans though they're reporting as OTHER on Equifax. Not certain that makes a difference or not. My score hasn't recovered even with several card balances paid off and held constant, so I'm assuming the drop from 708 to 690 was explicitly the car loan being paid.
Not happy but that's the breaks I guess. My Beacon 5.0 didn't budge an inch, so I think FICO 8 might be counting stuff a little differently at least on Equifax.
I'll let you know what happens when my trade in reports as paid and my new auto loan hits the CR...
Actually I'm really looking forward to seeing that information! I don't think it mattered under earlier versions but we've always theorized there were different strata of installment loans and this may be pretty good proof of that.
I will definitely let you know!
On a side note, I had a 5k Lending Club personal loan hit my reports last week... TU went up 3 points... EQ and EX didn't move. TU seems a bit weird... I gain points with reasons being "your total retail CC balance has decreased" but I never see reasons like that from EQ and EX.
The Lending Club loan reports as installment and I also have 5 Sallie Mae turned Navient student loans in addition to the new/old car loans that are about to be added/updated.
@Anonymous wrote:My credit score didn't change at all when my new auto loan reported in December, but just took a 19 point hit on EQ and a 15 point hit on EX when the payoff of my old auto loan showed up. Makes no sense.
Just to update my earlier posts... my previous auto loan ($16k) has reported as paid. My new auto loan ($44k) just hit 2 of my reports... EQ reported no change in FICO score.
EX reported a 6 point gain.
No report yet from TU.
I stand corrected... EQ reported a 4 point loss this morning with the auto loan report. It had reported no change when the old one reported paid off.
So... payoff and new loan results in 4 point EQ loss... 6 point EX gain.
Both 686.