topic Re: Auto loan pay down for score bump? in Auto Loans

Auto loan pay down for score bump?

Anonymous — Tue, 09 Jun 2020 21:47:23 GMT

Hello,

Will paying an installment loan (auto) below a certain percentage increase scores? Like I know with credit cards there are certain utilization thresholds where you can see a bump, wondering if that's the case for auto.

Re: Auto loan pay down for score bump?

Kforce — Wed, 10 Jun 2020 00:11:23 GMT

Yes, but I don't know the thresholds.

Re: Auto loan pay down for score bump?

DaveInAZ — Wed, 10 Jun 2020 20:58:52 GMT

@Kforce wrote:
Yes, but I don't know the thresholds.

Well, I don't think any score bump for an installment loan would be as much as lowering credit card debt, but I'm pretty sure the thresholds for installment loans is the same as CCs:

75%+ Very Poor

50-74% Poor

30-49% Fair

10-29% Good

0-9% Excellent

I'll find in August when my payment gets my DCU car loan under 49%. At the very least I hope to get rid of the message on my Fico scores of "Loan balance too high!".

Re: Auto loan pay down for score bump?

Anonymous — Wed, 10 Jun 2020 22:13:16 GMT

Per:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Proportion-of-loan-balances-too-High-Message/m-p/5306396/highlight/true#M142139

8.99% for F8.

Re: Auto loan pay down for score bump?

Anonymous — Thu, 11 Jun 2020 00:30:34 GMT

And since I just ran across this, i'll post this here for the sake of completion:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/General-Scoring-Primer-and-Version-8-Master-Thread-rev-5-17-20/m-p/6023348#M169679

Re: Auto loan pay down for score bump?

DaveInAZ — Thu, 11 Jun 2020 14:07:16 GMT

@Anonymous wrote:
Per:
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Proportion-of-loan-balances-too-High-Message/m-p/5306396/highlight/true#M142139

8.99% for F8.

"FICO 8 continues to assess a penalty on non-mortgage installment debt until the ratio is < 8.99%. The penalty is likely far less than it would be at 90% (say) but some penalty still exists until you are under that breakpoint."

- Which is insanely stupid of Fico in my humble opinion. When you're <8.99% you have only a few months of payments left, and when you make your final payment you get a (slight) penalty for lack of credit mix. So, for 90% of the life of your installment loan you're penalized for the loan amount being "too high", then a brief period of "all good', followed by "lack of credit mix, not good" . As Mr. Spock would say "That is not logical".

Re: Auto loan pay down for score bump?

Anonymous — Thu, 11 Jun 2020 16:15:04 GMT

@DaveInAZ wrote:
@Anonymous wrote:
Per:
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Proportion-of-loan-balances-too-High-Message/m-p/5306396/highlight/true#M142139

8.99% for F8.
"FICO 8 continues to assess a penalty on non-mortgage installment debt until the ratio is < 8.99%. The penalty is likely far less than it would be at 90% (say) but some penalty still exists until you are under that breakpoint."
- Which is insanely stupid of Fico in my humble opinion. When you're <8.99% you have only a few months of payments left, and when you make your final payment you get a (slight) penalty for lack of credit mix. So, for 90% of the life of your installment loan you're penalized for the loan amount being "too high", then a brief period of "all good', followed by "lack of credit mix, not good" . As Mr. Spock would say "That is not logical".