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personal loan and impact

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hippyguy
Member

personal loan and impact

Hi MF, newbie question on score impact: Very long story short I currently have 13 Prime CC acounts, 30 inquiries total (EX,EQ,TU) scores are 702,718,720 (MF). Back in March I went on an app binge (good story for another post loads of DP), so I'm still waitng on a few to report (I'm averaging -3 points for inquiry and +5 at posting). UTI is 8% on 120K availible. I have no derogs other than BK discharged in 09, never late since. I have always PIF, since reading the forums four months ago I've PIF prior to statements dates, however I have one card that gets our family vacation charged annualy so the balance always starts at 10K and gets down to 6K prior to the start of the next calander when the balance is PIF with bonus..................sorry so long................Situation: My employer has given notice that we will not recieve car allowances starting in July and is issuing us a fleet vechicle, this is great news but I bought a new car in November (Hippygirls vehicle is paid off). My new car is horribly inadiquate for my family so we will keep the wifes vechicle and loose the new car. I went to CM and got an appraisal, applied for a PL at 7.65% from NFCU sold my 2017 and paid negitive equity and combined my only CC balance  in the loan (36 mos, I'll pay in 12). What can I potentially expect to see happen over the next three months due to this action. I loose a 26K car payment, I loose all my CC debt (I will float 1% each month) but I pickup a new installment loan for half of the new car's balance (Inquiries have already posted in above figures). I know there are variables, my file is solid (lots of loans paid off, all accounts paid as agreed, oldest is 22yrs, but my AAoA is fair or good due to App Binge. 

7 REPLIES 7
hippyguy
Member

Re: personal loan and impact

I am officially in the garden to age new accounts

Message 2 of 8
Anonymous
Not applicable

Re: personal loan and impact

Not much effect for changing an auto loan into a smaller personal loan at all, but that was a smart move to make.

 

Paying down cards to AZEO will help a bit.  Paying that installment loan down will help a tinier bit.  Getting your AAoA up hgher will help a bit.

 

I bet you see 20-30 point gain in a year.  In 3 months?  Likely not too major of a boost.

 

Is your BK reporting still on all 3 CRAs?  The BK keeps you in a dirty scorecard, so there's a maximum FICO score for that and you likely won't get above it.  Not sure what the max is, maybe @Revelate would know.  I'd guess 740 is the max or somewhere around that until it drops off.

Message 3 of 8
hippyguy
Member

Re: personal loan and impact

Thanks for replying ABCD, I think your close on the max Fico for post discharge BK, my wife has peaked and held at a 736 and nothing we try will get it to budge much. I usually hover in the 720's and yes, unfortunatley it is still reporting accross all for the both of us. Years ago I sent out what felt like hundreds of letters to get our reports all reporting TL's correctly and recently have toyed with the idea of trying to dicpute the BK but I've yet to find a good answer on how to do it. 

Message 4 of 8
Anonymous
Not applicable

Re: personal loan and impact

There are some questionable methods on some.othwr credit forums on doing it but I don't have any personal experience there so I can't properly recommend anything more than waiting.

I would dispute anything that is incorrect. I'd also freeze LN forever no matter what.
Message 5 of 8
Anonymous
Not applicable

Re: personal loan and impact

Good advice from ABCD.  Here are a few additional thoughts:

 

As I look at the before-and-after for CC debt it appears nothing has improved.  I.e. your utilization was < 8.9% before and it still is < 8.9%.  You had almost all cards at $0 before and you still do.

 

The one CC factor you may get help with is individual utilization.  You had one card that was carrying 6-7k (?) from a family vacation -- and if the card had (say) a 10k credit limit, then that card had a high individual utilizatrion before (not good) and now has a low one (good).  If you tell us what the individual U was ABCD might be able to speculate better on the scoring advantage your recent wise actions will reap.

 

The key to your scoring situation (as I see it) is this:

 

(1) You have had a vast amount of new credit lately (30 inquiries!, presumably many new credit cards, etc.)

 

(2)  You say you are willing to garden for a good while

 

The key way to help yourself is to stop applying for any new credit for the next 13 months at the very least.  The scoring impact of the inquiries will go to zero, your Age of Youngest Account will cross over 1 year (also important) and the percentage of your accounts that FICO considers "new" will be much smaller.

 

The other thing to do is to look into the personal loan.  You talk about paying off this 36-month loan early (at month 12).  Investigate whether NFCU will permit you to pay the loan down to a low balance (e.g. $50) and turn off any auto payments.  Many CUs will allow you to keep the loan open for the full 36 months in that event with no more payments due until month 35.  That will prevent your score from taking a dive when you pay the loan off (assuming this loan is your only open loan right now).

 

Again, a firm commitment to applying for no credit whatsoever would help you a lot.  You already have 13 major credit cards.  Getting a 14th will not help you at all.  Not now, not in two years, not in five years.  After 13 months of no credit applications, you could then treat yourself to one new card per year (though that's only if it will keep you happy -- it won't help your score at all).

Message 6 of 8
hippyguy
Member

Re: personal loan and impact


@Anonymous wrote:

Good advice from ABCD.  Here are a few additional thoughts:

 

As I look at the before-and-after for CC debt it appears nothing has improved.  I.e. your utilization was < 8.9% before and it still is < 8.9%.  You had almost all cards at $0 before and you still do.

 

The one CC factor you may get help with is individual utilization.  You had one card that was carrying 6-7k (?) from a family vacation -- and if the card had (say) a 10k credit limit, then that card had a high individual utilizatrion before (not good) and now has a low one (good).  If you tell us what the individual U was ABCD might be able to speculate better on the scoring advantage your recent wise actions will reap.

 

The key to your scoring situation (as I see it) is this:

 

(1) You have had a vast amount of new credit lately (30 inquiries!, presumably many new credit cards, etc.)

 

(2)  You say you are willing to garden for a good while

 

The key way to help yourself is to stop applying for any new credit for the next 13 months at the very least.  The scoring impact of the inquiries will go to zero, your Age of Youngest Account will cross over 1 year (also important) and the percentage of your accounts that FICO considers "new" will be much smaller.

 

The other thing to do is to look into the personal loan.  You talk about paying off this 36-month loan early (at month 12).  Investigate whether NFCU will permit you to pay the loan down to a low balance (e.g. $50) and turn off any auto payments.  Many CUs will allow you to keep the loan open for the full 36 months in that event with no more payments due until month 35.  That will prevent your score from taking a dive when you pay the loan off (assuming this loan is your only open loan right now).

 

Again, a firm commitment to applying for no credit whatsoever would help you a lot.  You already have 13 major credit cards.  Getting a 14th will not help you at all.  Not now, not in two years, not in five years.  After 13 months of no credit applications, you could then treat yourself to one new card per year (though that's only if it will keep you happy -- it won't help your score at all).


Thanks for chiming in CreditGuy, you are real close on your guesstimate CC balance was 7200 on a 15K card so 49%(ish), cleaned up any balances my wife was carrying on her file, and the neg equity on early trade of a brand new vehicle. From a monthly finance standpoint we are saving money, but you are correct the reality is we are just converting existing debt to installment debt. Great idea on the pay down fast and carry a small reportable balance for the full term of the loan, I will make that call and see how they feel about it. If you don't mind I do have a question on the inquiries, most of what I am carrying relate to mortgage shopping last year, and I have several from purchase of my car in November and subsequent refi to CU at 1.99% is it true that those inquiries don't weigh as heavily with the big three? Or is the reality of the FICO algorithm a different beast all together? * This has of course no bearing on my app grab that lasted from March through April, I am 100% guilty of those Smiley Happy. Gardening is key right now as I have to get serious about a home purchase and relocation in two years so that is a given. 

Message 7 of 8
Anonymous
Not applicable

Re: personal loan and impact

If you made a whole bunch of mortgage inquiries within a very short time, then they will all get lumped together as a single inquiry for scoring purposes.  For example, if you had ten mortgage inquiries in a 13-day period, all ten would be treated by FICO as one.  But if you had a followup mortgage inquiry five weeks after that, then that would count as a second inquiry (since it wasn't part of that small window of rate shopping).

 

Same goes for auto loans.

 

The practical upshot, however, is that you plan to garden for at least 13 months and you don't plan to buy a home for longer than that, so it doesn't matter.  All the inquiries will lose their scoring impact by month 13.  If most of them were the result of rate shopping, however, you may get less of a boost at that time since FICO is already internally eliminating most of them.

Message 8 of 8
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