penalized for not having installment loan? what does this mean

[jamie123]

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@CreditPlay wrote:

Jamie- No update from you! Did your score go up after you started paying?

my updates- my first installment loan hit CRAs few days back. My scores dropped : EX: 1 point , TU : 4 points and  EQ : 16 points  really?

other changes: my util went from 1.5 to 2% with one more card reporting balance. So now 3 out of 7 is reporting a balance , i thought thats the primary reason of 16 point score drop, but thats not true. That 3rd card balance never hit EQ. So looks like EQ dint like my installment loan account  No other changes on my report.

what do you guys think?

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Well...I've been posting on another thread about my progress, sorry.

I have been both paying down my UTI, number of cards reporting and making my installment loan payments. Just yesterday my EQ score went up 7 points for no known reason. The MyFICO alert said that my score went from 683 to 690 because of "Equifax Data" whatever that is supposed to mean. The only thing that I can think of is that it picked up my 3rd Alliant installment loan payment on my 4 year loan that was made on September 1st.

Today EQ picked up a CC payment that bought my total UTI on that card from about 27% to 5%.(This will become my reporting card.) My EQ score went up another 6 points to 696! I still have 2 cards that need to report a $0 balance to get into prime credit grooming shape with having only 1 card report less than 10% and all the rest $0. That will still take about another 12 days or so.

[CreditPlay]

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@jamie123 wrote:

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@CreditPlay wrote:

Jamie- No update from you! Did your score go up after you started paying?

my updates- my first installment loan hit CRAs few days back. My scores dropped : EX: 1 point , TU : 4 points and  EQ : 16 points  really?

other changes: my util went from 1.5 to 2% with one more card reporting balance. So now 3 out of 7 is reporting a balance , i thought thats the primary reason of 16 point score drop, but thats not true. That 3rd card balance never hit EQ. So looks like EQ dint like my installment loan account  No other changes on my report.

what do you guys think?

---

Well...I've been posting on another thread about my progress, sorry.

I have been both paying down my UTI, number of cards reporting and making my installment loan payments. Just yesterday my EQ score went up 7 points for no known reason. The MyFICO alert said that my score went from 683 to 690 because of "Equifax Data" whatever that is supposed to mean. The only thing that I can think of is that it picked up my 3rd Alliant installment loan payment on my 4 year loan that was made on September 1st.

Today EQ picked up a CC payment that bought my total UTI on that card from about 27% to 5%.(This will become my reporting card.) My EQ score went up another 6 points to 696! I still have 2 cards that need to report a $0 balance to get into prime credit grooming shape with having only 1 card report less than 10% and all the rest $0. That will still take about another 12 days or so.

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Good going. Thanks for the update! 

[gen-specific]

give it time, I'm curious to see how this plays out for other people

my credit scores are very volatile, mind you. A year ago, I had 750s and then one thing for a BUSINESS ACCOUNT that I co-signed went into collections, which I promptly paid (you know, how guarantees work), and the 1 single collection dropped my scores nearly 100 points, and they quickly recovered back to an average of 701....

So, for me, the installment loan was more so to solidify my credit score and protect it from shocks by simply having more parts of the formula accounted for.

Calculated, the interest rates I would be eligible for at a 701 score would be way more expensive than the $500 installment loan I've parked over there,  than the 764 score I achieved after opening the loan

[psm]

I am interested in opinions as to what effect it would have to have just paid off all mortgage and installment loans. I currently have open a student loan, car loan and mortgage. We are looking to buy a new house in 18 months, probably sell our current house sooner and live with relatives for a few months. My car loan will be paid off at around the same time.
My student loan will be paid off about the same time as well - or I could pay it off sooner. It is 6.25% and about 3000 at this point. I would pay it off sooner but worry that I would then have no installment loans when we are house shopping. My scores are pretty good now, but they seemed about 20 pts lower in FICO 04 6 months ago.

Is it worth a little more in interest payment to slow my rate of paying the college loan off so that I am sure that I have one active installment loan in 18 months?

[vanillabean]

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@psm wrote:

I am interested in opinions as to what effect it would have to have just paid off all mortgage and installment loans.

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fused is well-versed in this area, lol.

[jamie123]

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@psm wrote:

I am interested in opinions as to what effect it would have to have just paid off all mortgage and installment loans. I currently have open a student loan, car loan and mortgage. We are looking to buy a new house in 18 months, probably sell our current house sooner and live with relatives for a few months. My car loan will be paid off at around the same time.
My student loan will be paid off about the same time as well - or I could pay it off sooner. It is 6.25% and about 3000 at this point. I would pay it off sooner but worry that I would then have no installment loans when we are house shopping. My scores are pretty good now, but they seemed about 20 pts lower in FICO 04 6 months ago.

Is it worth a little more in interest payment to slow my rate of paying the college loan off so that I am sure that I have one active installment loan in 18 months?

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You are a perfect candidate for an Alliant four year $500 shared secured installment loan.

Your scores will drop a bit once your student, auto and mortgage loans are paid off but by having them paid off will do WONDERS for your DTI. On a manual review for your next mortgage, with your scores and everything paid off, mortgage lenders will be fighting each other to lend you money.

I would suggest getting a four year $500 shared secured loan at least 1 year before you plan on applying for your new mortgage. It will give you all the points for having an open installment loan with none of the downside of DTI damage. The four year $500 loan's monthly payments are only $12. So you get the FICO points but not a noticeable change in your monthly DTI calculation.

[Anonymous]

Well I'm stronly thinking about getting the Alliant $500, 4 year loan going.  My Bankruptcy was dismissed 4/2013, and I'm looking to get a car next spring, and don't want to pay 8% interest.  The credit tracker on my Capital One cards had me thinking my TU was at 664, about to go to 677 with the CL increase I just got.  To my surprise when I signed up for myFICO I'm at 661 EQ, 634 TU, and 644 EX.  Of course the BK is killing me, and I only have the 2 CC so I'm getting dinged for no installment loans.  The guy I talked to at the Credit Union seemed to think a small secured loan like this wouldn't do me any good for getting a car in 6 months, but I think it's worth a shot.  I could always pay the balance down some a couple months prior to getting the car to have the balance at maybe 50% of the original loan.  I don't like having to play games like this to try to bump up my score, but I don't know what else to do at this point.  As time goes on the BK and the many negatives associated with that will go away.  I'm doing all I can on my Credit cards as far as keeping 1 at no balance and the other one at 1% or so.  So at this point I think doing the Alliant loan is worth a shot.  Even if it has a small negative impact on my first credit report, I would think in 6 months it would either have no effect, or possibly a small positive effect.  If I can somehow get my EQ up to 675 (from 661) I would be able to get the best rate a DCU on an auto loan.  Any thoughts?

[Anonymous]

So on Monday I can take out the $500, 4 year loan from Alliant.  I am hoping it helps my EQ score out as I want to buy a car in 6 months or so, and if I can get my EQ score up 14 points I can get the 1.49% rate from DCU.  If say in 4 months from now my scores have taken a negative hit from this loan, can I just pay it off and have my score revert back to what the baseline is now (assuming everything else is equal)?  So if I take a 10 point dive from this loan, by paying it off it would seem to put me in the same boat I'm in now; 2 credit cards, 1 with no balance and another with 1% balance.  I will be several months further out from my bankruptcy so maybe that will help.  I just don't want to end up shooting myself in the foot with this loan and end up paying more interest than if I would have left things alone.

[jamie123]

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@Anonymous wrote:

So on Monday I can take out the $500, 4 year loan from Alliant.  I am hoping it helps my EQ score out as I want to buy a car in 6 months or so, and if I can get my EQ score up 14 points I can get the 1.49% rate from DCU.  If say in 4 months from now my scores have taken a negative hit from this loan, can I just pay it off and have my score revert back to what the baseline is now (assuming everything else is equal)?  So if I take a 10 point dive from this loan, by paying it off it would seem to put me in the same boat I'm in now; 2 credit cards, 1 with no balance and another with 1% balance.  I will be several months further out from my bankruptcy so maybe that will help.  I just don't want to end up shooting myself in the foot with this loan and end up paying more interest than if I would have left things alone.

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I think you are making a GREAT move to get the Alliant loan. I think it will start to be a positive influence on your scores in about three months or sooner. Besides it will be another positive TL to help build good history.

I think that I only took a 5 point hit when the loan first reported at 100% balance and my scores recovered and went higher after the 2nd payment reported. I wouldn't even worry about paying it down at all.

[Anonymous]

Thanks for the help.  What you just said was my thinking as well, but then I used the credit tracker calculator on my Capital One account and it showed a possible 30 point hit with a $500 personal loan.  Seeing as the score that thing provides is off by 30 points anyway I'm just going to ignore it and press forward with the loan.  I hate playing shell games with my money, but I guess I need to play the game if I want to spend less on interest.