credit mix question

[fritscher]

Hi have had some installment loans in the past..my most recent was paid off 2 years ago (car loan) i also had a couple personal loans 4 years ago but paid off in good standing..now i only hove mortgage and credit cards. I do not anticipate ever getting any more installment loanas..no need for them..will my credit score go down in time because of this or is it where it is now and will just show changes due to my credit card accounts..

i dont know why the credit scoring requires you to have different types of credt..Would it now just show on my report that Yes i had these types of loans and did well with them in the past?

[Anonymous]

@fritscher wrote:

Hi have had some installment loans in the past..my most recent was paid off 2 years ago (car loan) i also had a couple personal loans 4 years ago but paid off in good standing..now i only hove mortgage and credit cards. I do not anticipate ever getting any more installment loanas..no need for them..will my credit score go down in time because of this or is it where it is now and will just show changes due to my credit card accounts..

i dont know why the credit scoring requires you to have different types of credt..Would it now just show on my report that Yes i had these types of loans and did well with them in the past?

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For sure.  It certainly shows on your report that you have repeatedly handled personal and auto loans in the past with perfect payment histories on them.  That will be visible to any loan officer or CC issuer who pulls your report to evaluate you for any new application for credit that you make.  Such a person reviewing your report will also see the other installment loan that you have -- an open mortgage -- also with perfect payments.

Bear in mind that the closed accounts will eventually fall off your report and then they will NOT be visible.  You will nevertheless still have an open mortgage on your report which will look great. 

My response thus far addresses your question about your report.  To what extent scoring models might consider the closed accounts in your score is a diffferent question.  If these closed accounts were the only installment accounts on your report, then my guess is that they would help your "credit mix" category -- i.e. it would be better for credit mix to have some closed loans than no installment accounts whatsover (closed or open).  Closed installment accounts do not, however, help your "installment utilization" which is a factor from another category ("Amounts Owed").

But in your case you have an open installment loan on your reports on your report, so that takes care of credit mix even if you didn't have the closed auto and personal loans..  As the mortgage is slowly paid down, your "installment utilization" will also go down, which will help your score.

How many credit cards do you have?  As you describe it, your future credit profile will consist of one open mortgage and some open credit cards.  (All the closed accounts will eventually fall off.)  There's a scoring advantage to having more than just 2-3 accounts (closed and open together) on your profile -- such profiles with few accounts are categorized by FICO as "thin."  If you only have a couple cards, this year might be a good time to add a few more, just so you will can be sure that you always have at least six accounts on your profile.  (Six is not a magic number, just a decent rule of thumb.)

[fritscher]

thank you so much for the good information..i have 14 credit cards and mortage..that is all that is open now...my scores are in mid 700s now

[wa3more]

This is a YMMV. I have a real thin file.

I have a couple of mortgages (20 years, 10 years ) and 1 low limit credit card ..that's it. All 3 scores about 830. Maybe too many cards could hurt your score ? I'm not sure.

[Anonymous]

Try opening an SSL and following the protocol here on the boards. That should give you the bump you're looking for.

[Anonymous]

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@Anonymous wrote:

Try opening an SSL and following the protocol here on the boards. That should give you the bump you're looking for.

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I don't know about that one. Both people above have mortgages so they're already getting the credit mix points.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Try opening an SSL and following the protocol here on the boards. That should give you the bump you're looking for.

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I don't know about that one. Both people above have mortgages so they're already getting the credit mix points.

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I thought it was determined that mortgages, student loans, and other installment loans affect scores differently? 

[Anonymous]

That's a conjecture.  It's possible, for example, that student loans are not scored separately at all; or maybe they are; or maybe its that SLs in deferment are not counted toward your installment U or counted differently.  Right now we do not know.

I am trying to get some students or recent grads to test that.  I hope to have a definite answer by the end of summer.

The data that have been posted about mortgages strongly suggest that a new 100% utilized mortgage erases any benefit from a $500 SS loan that was paid down to < 9%.  But that doesn't mean that mortgages are not scored differently -- it may be the case that one can achieve one's maximum benefit in paying down a mortgage at a far higher installment U, e.g. 69% say as opposed to 9% for an SS loan.  Again, we don't know the details.

The best advice until we know more is that the SS loan technique will likely benefit only people with no open installment loans -- and even there only for the FICO 8 score.

[Anonymous]

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@Anonymous wrote:

That's a conjecture.  It's possible, for example, that student loans are not scored separately at all; or maybe they are; or maybe its that SLs in deferment are not counted toward your installment U or counted differently.  Right now we do not know.

I am trying to get some students or recent grads to test that.  I hope to have a definite answer by the end of summer.

The data that have been posted about mortgages strongly suggest that a new 100% utilized mortgage erases any benefit from a $500 SS loan that was paid down to < 9%.  But that doesn't mean that mortgages are not scored differently -- it may be the case that one can achieve one's maximum benefit in paying down a mortgage at a far higher installment U, e.g. 69% say as opposed to 9% for an SS loan.  Again, we don't know the details.

The best advice until we know more is that the SS loan technique will likely benefit only people with no open installment loans -- and even there only for the FICO 8 score.

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I definitely mean all of this in terms of observation and comparison of data points, here, not any detail.

And as always, thank you for your data gathering and sharing!

[wa3more]

i think the OP just needs some time making on time payments.

Yes my file is in with 2 mortgages and small credit card with 10% util but the mortgages are 15-20 years old.

Your score will improve with time.  A 720/750+ score will work fine.