topic Re: Should I get a new installment loan? - Avoiding credit score drop in Understanding FICO® Scoring

Should I get a new installment loan? - Avoiding credit score drop

Anonymous — Sat, 23 Apr 2016 08:03:58 GMT

So my auto loan is over next month in May, and I want to avoid the credit score drop that results from ending an installment loan.

I do have a personal one year $1K loan that I randomly took out in Dec 2015 still active (from my credit union, SchoolsFirst FCU). Is that enough to keep my score from dropping, or should I get another personal loan since I have two at the moment?

I was thinking of getting a consolidation loan, any recommendations?

Thanks in advanced!

Re: Should I get a new installment loan? - Avoiding credit score drop

RonM21 — Sat, 23 Apr 2016 08:13:01 GMT

That is a good question. I thought I read on here that one open installment was okay, but maybe somehow having 2 gives you the max scoring in this category of Fico. Maybe someone with better knowledge will chime in.

Re: Should I get a new installment loan? - Avoiding credit score drop

Anonymous — Sat, 23 Apr 2016 16:12:23 GMT

bump

Re: Should I get a new installment loan? - Avoiding credit score drop

SouthJamaica — Sat, 23 Apr 2016 17:07:15 GMT

@Anonymous wrote:
So my auto loan is over next month in May, and I want to avoid the credit score drop that results from ending an installment loan.

I do have a personal one year $1K loan that I randomly took out in Dec 2015 still active (from my credit union, SchoolsFirst FCU). Is that enough to keep my score from dropping, or should I get another personal loan since I have two at the moment?

I was thinking of getting a consolidation loan, any recommendations?

Thanks in advanced!

I think that loan is fine. When you get near the end of the year you might want to add a share secured loan or something. But for the next 6 or 7 months you're good.

Re: Should I get a new installment loan? - Avoiding credit score drop

Revelate — Sat, 23 Apr 2016 21:54:55 GMT

It's all aggregate percentages when it comes to installment utilization. Credit mix for installment loans is next to non-existent on the FICO 8 algorithm, or it counts closed installment loans the same as in prior models.

In any event after your current loan reports paid / closed, it no longer factors; if you get a material change in your installment utilization without this loan's being open, (north of 10% aggregate, or north of call it 80% aggregate) you will see a drop.