penalized for not having installment loan? what does this mean

[Revelate]

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@JCSC wrote:
I would not agree with getting a secured installment loan. I have one and it reports as "deposit related" and almost looks as if it counts negatively against my score. The comment of not having an installment loan is also present in my report.

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Who is it from?  Both mine from USAA and Alliant report correctly as installment loans.

It's been established over and over again that secured vs. unsecured makes no difference on tradelines (and that has been verified by a FICO credit expert); however, if yours is not reporting "correctly" as an installment loan then YMMV.  

[gen-specific]

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@Revelate wrote:

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@JCSC wrote:
I would not agree with getting a secured installment loan. I have one and it reports as "deposit related" and almost looks as if it counts negatively against my score. The comment of not having an installment loan is also present in my report.

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Who is it from?  Both mine from USAA and Alliant report correctly as installment loans.

It's been established over and over again that secured vs. unsecured makes no difference on tradelines (and that has been verified by a FICO credit expert); however, if yours is not reporting "correctly" as an installment loan then YMMV.  

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why two?

edit: I can see this being used to overlap the times. Since when one 5 year loan expires your score may drop a bit, the other could be a 5 year loan started at year 3 and overlap the other one's ending, keeping your score high while you start a different loan again from the first institution

[gen-specific]

@jamie123 , @Revelate

Okay I'm all set up with Alliant

1) How do I initiate an Electronic/ACH transfer of funds into that savings account?

I can't find the routing number, do you know it

2) Why was your deposit and loan worth $500 ?  is this an arbitrary sum or is that the minimum deposit or ...?

[gen-specific]

okay I called and got the answer to both of those questions: routing number is 271081528 and $500 is the minimum 

btw, the donation seems to be more so procedural and not actually verified (maybe it is later, but I have my doubts)

[Revelate]

Anecdotally it appears that 2 open installment lines was better than one scorewise.  That was "verified" under the older scoring model and I know that I got straight boosts to my FICO '04 score when both my first and second credit card reported, and also my first and second installment loans.  Granted I only had monthly checking at that point but everything was so new in my file it's not like I hit six month anniversaries or any other purported bonus points, and nowhere close to the amount I gained from inquiries fading slightly in the intervening period.

Regarding your plan, I don't overlap like that: I open new accounts before the others run out... but I'm a spree proponent and I just include the loans as part of my applications.  $500 because it was the minimum, no sense wasting more interest in FICO reindeer games than necessary.

[gen-specific]

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@Revelate wrote:

Anecdotally it appears that 2 open installment lines was better than one scorewise.  That was "verified" under the older scoring model and I know that I got straight boosts to my FICO '04 score when both my first and second credit card reported, and also my first and second installment loans.  Granted I only had monthly checking at that point but everything was so new in my file it's not like I hit six month anniversaries or any other purported bonus points, and nowhere close to the amount I gained from inquiries fading slightly in the intervening period.

Regarding your plan, I don't overlap like that: I open new accounts before the others run out... but I'm a spree proponent and I just include the loans as part of my applications.  $500 because it was the minimum, no sense wasting more interest in FICO reindeer games than necessary.

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ah hmm, alright, a bit of a risk since I don't know how FICO 08 weighting works in this regard but since some lenders still use FICO 04 and others use Vantage Score I'm sure it'll have some effect, I'll stick with 1 loan and see what happens

With my other scores naturally trending upwards without an installment loan, maybe I'll set a goal of 750 or 780 and see how close I get

haha I had to look that up, reindeer games accurately describes what all of this is! its so funny that any of this gives such a massive advantage in appropriating goods and resources in this world... even if you get too much and go bankrupt that doesn't change the experiences you had with all those free points and miles along the way

[jamie123]

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@gen-specific wrote:

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@Revelate wrote:

Anecdotally it appears that 2 open installment lines was better than one scorewise.  That was "verified" under the older scoring model and I know that I got straight boosts to my FICO '04 score when both my first and second credit card reported, and also my first and second installment loans.  Granted I only had monthly checking at that point but everything was so new in my file it's not like I hit six month anniversaries or any other purported bonus points, and nowhere close to the amount I gained from inquiries fading slightly in the intervening period.

Regarding your plan, I don't overlap like that: I open new accounts before the others run out... but I'm a spree proponent and I just include the loans as part of my applications.  $500 because it was the minimum, no sense wasting more interest in FICO reindeer games than necessary.

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ah hmm, alright, a bit of a risk since I don't know how FICO 08 weighting works in this regard but since some lenders still use FICO 04 and others use Vantage Score I'm sure it'll have some effect, I'll stick with 1 loan and see what happens

With my other scores naturally trending upwards without an installment loan, maybe I'll set a goal of 750 or 780 and see how close I get

haha I had to look that up, reindeer games accurately describes what all of this is! its so funny that any of this gives such a massive advantage in appropriating goods and resources in this world... even if you get too much and go bankrupt that doesn't change the experiences you had with all those free points and miles along the way

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Having an installment loan will help you in other FICO scoring models that we consumers can't see and also in manual reviews.

Auto loan lenders use an Auto loan weighted FICO model that is different than FICO 04 and FICO 08. You might walk in a dealership with your FICO 04 720 score and find out that your FICO Beacon score is only 690! You just missed out on better terms because your score is not good enough to get better terms in their eyes/model. The Auto loan model likes to see installment loan history and if you don't have it your scores will take a beating.

[vanillabean]

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@myjourney wrote:

I wouldn't worry about it the installment/motgage/auto loans only accounts for 10% of Fico scoring which leaves 90% other factors that affect you more 

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Both the mortgage loan and the auto installment loan of my household will soon close. I don't lose any sleep over it.

When that is said, I don't think an installment is beneficial, unless you're past the first year and have paid off most.

[Revelate]

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@Anonymous-own-fico wrote:

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@myjourney wrote:

I wouldn't worry about it the installment/motgage/auto loans only accounts for 10% of Fico scoring which leaves 90% other factors that affect you more 

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Both the mortgage loan and the auto installment loan of my household will soon close. I don't lose any sleep over it.

When that is said, I don't think an installment is beneficial, unless you're past the first year and have paid off most.

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I almost never disagree with you, but in this instance your situation isn't most people's here my friend:

• you have a gold plated credit score anyway
• you already have installment loans on your report

An installment loan is definitely beneficial if you don't have any on your report: that's unarguable in my opinion with how the model is designed.

It is somewhat debateable whether you need an open installment loan on your report, but it's been shown repeatedly that not having 2 open was a small negative on FICO '04 (and might be higher on FICO 8 as we've seen with revolving), which is irrelevant at your score strata, but when you're me fighting tooth and nail to get above 700 on a mortgage score with derogatories capping my maximum score by landing me in one of the ugly buckets, a few points might be the difference between a 20 and 30% downpayment, and given So Cal housing prices.... that could be an additional 100k I have to come up with on average.  Yuck.

[ficonightmare]

My score currently is 798 on both EQ 08, and EX, and 792 on TU.

My scores break 800 all the time without any installment loans. Under the "Understanding Your Score" tab it says that "no installment loans" is hurting my score. This is on both EQ and EX reports.

But you know what, who cares? My scores are high enough without one. Even if my score went up to 850 with a loan, how's that gonna help me? It's not.

So unless you're ready to buy a home, and the extra points would really help lower your rate, i think it's kinda pointless to do.  Also, ultimately, you really can't say for certain what taking a loan, regardless how small would do for your score. Depending on what else FICO is reading in your file, it may hurt it.