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@Anonymous wrote:
I currently have an auto loan with Wells Fargo. They offer auto-loan refinancing, which I am considering doing because my score has risen by since I got the loan through them. I am wondering if refinancing through the same company will have any effect on my AAOA or mix of credit? Does anyone know?
Mix of credit is neutral since you're closing one and opening another.
AAOA will be impacted potentially by the fact the refinance will generate a new tradeline. Does WF allow you to refinance one of their own loans? Not everyone will.
Yes I believe it will have an effect. One of the factors shown on my report under "What’s hurting your FICO® score" is regarding my Wells Fargo loan. It states, "FICO High Achievers have paid down an average of 37% of the principal on their non-mortgage installment loans.". Therefore, with a new loan reporting as 100% of the original principal, you will have restarted the pay-down process and will be far away from 37%.
@Zippy2014 wrote:Yes I believe it will have an effect. One of the factors shown on my report under "What’s hurting your FICO® score" is regarding my Wells Fargo loan. It states, "FICO High Achievers have paid down an average of 37% of the principal on their non-mortgage installment loans.". Therefore, with a new loan reporting as 100% of the original principal, you will have restarted the pay-down process and will be far away from 37%.
I have opened multiple installment loans over the course of the past two years and I haven't taken any penalty whatsoever unless I change AAOA metrics.
It's possible that my file is too new / too dirty and I'm thrown up against a bucket wall, but a backwards looking analysis like Credit Karma or WF's case, does not an algorithm make. YMMV as always.
If it goes down is it really a problem? Isn't that the point of having good credit... to get credit? Isn't a small dip in your score worth saving money for? I understand if you're planning to app for a mortgage but otherwise go for it!
@Anonymous wrote:
I currently have an auto loan with Wells Fargo. They offer auto-loan refinancing, which I am considering doing because my score has risen by since I got the loan through them. I am wondering if refinancing through the same company will have any effect on my AAOA or mix of credit? Does anyone know?
I've done this multiple times over the years with absolutely no adverse effect. I have a current auto loan that I did a refi on a few years back to get a lower rate; kept it within my CU so it was just a transition from one loan to another within their loan department. I've also done the same with a travel trailer, going from a higher interest lloan to a lower interest loan at a different bank. Again, no adverse effect. Granted, I have a very thick file with nothing bad at all, but there was no change in my scores at all.