topic Re: Installment tradeline utilization thread in Understanding FICO® Scoring

Installment tradeline utilization thread

Revelate — Sat, 06 Jun 2015 14:48:09 GMT

So a number of us have been kicking around the idea that installment tradelines have utilization metrics associated with it; I got a VERY interesting data point with regards to that today, so rather than tracking down the old threads I'm starting a new one for tracking purposes.

As some of you know I'm going through the mortgage process so my files are pretty darned clean, and I've gotten 3 mortgage inquiries on each report, and my score has not moved downward as a result on any score model. Where things went sideways today, is that today I got a +8 point boost (for a reported inquiry haha) on Experian, and I managed to check that yes indeed my USAA payment to try to test this had reported on that one report only (CK verification of other two). So with this opportunity to get a single bureau isolated with a change compared to other two to really try to hit this, paid the two yuppie food stamps.

I didn't have the granularity to be able to test whether this was an individual or aggregate installment loan utilization issue, but there's virtually no other explanation with my report that I have for it, and 99.9% confident that some of the talking heads who over the years have babbled about it (youtube credit folks), are indeed correct and there are breakpoints somewhere in the range of ~80% - ~66% (thank you Jamie!) either individual or aggregate. Plausibly both, but I'm leaning towards aggregate only but that definitely needs more data both to determine that but also to dial in the breakpoint.

5/24 - 5/29 change:

1 account -> 2 accounts reporting a balance

5/29 - 6/25 change:

+3 mortgage-related inquiries on all reports,
2 accounts -> 1 account reporting a balance (and just as before TU Bank 4 moved identically) on all reports.
Alliant installment loan $415 -> $407 on EX/EQ, not on TU
USAA installment loan $2073 -> $1533 on EX only

Experian Installment Change
Dates		Current	Original	Percentage remaining
24-May	Alliant	415	500	83
and 5/29	USAA	2073	2500	82.92
pulls	Total	2488	3000	82.93

6/5 pull	Alliant	407	500	81.4
	USAA	1533	2500	61.32
	Total	1940	3000	64.67

Also FICO dumpage!

Score	24-May	29-May	5-Jun	Notes
EQ 8	690	690	690
EQ 5	700	700	700
EQ Auto 8	701	701	701
EQ Auto 5	697	697	697
EQ Bank 8	705	705	708	Beats me
EQ Bank 5	721	721	721

TU 8	706	706	706
TU 4	731	731	731
TU Auto 8	728	728	728
TU Auto 4	746	746	746
TU Bank 8	723	723	723
TU Bank 4	745	740	745	Back to 1 Revolver w/balance

EX 8	712	712	720	Installment Utilization!
EX 2	725	725	728
EX Auto 8	717	717	728
EX Auto 2	741	741	746
EX Bank 8	726	726	739
EX Bank 3	697	697	697
EX Bank 2	739	739	741

Re: Installment tradeline utilization thread

jamie123 — Sat, 06 Jun 2015 08:21:17 GMT

Not that you are long winded or anything Rev......Are you theorizing that the installment loan "sweet spot" is reached when the aggregate of installment loan remaining balance to starting balance ratio reaches 66%?

I tend to agree with that argument. From what I've learned, EQ seems to reach the "sweet spot" a little earlier than EX and TU. EQ seems to reach the "sweet spot" at around 80% as we saw in the thread a few days ago where that woman (Abby3) hit an 850 EQ with 3 (20%) years of her 15 year mortgage paid off. Her other scores at the time were EX 848 and TU 837. All of her reports had the same information, it is just that the CRAs treat installment pay off ratios a bit differently. I am surmising that your theory would work out in Abby3's case. When she gets her mortgage to 66% remaining balance (Or around 5 years paid off.) all her scores will be at 850.

You just demonstrated that your theory worked in your case, (Good job by the way!) so you are definitely on to something.

I'll see if I can test this but I'm not sure that I can. My 2 year loan is coming up on 50% and my 4 year loan will be at 75% soon so I guess I'm right at the cusp. I guess I'll have to fork out the $60 to pull the 3 reports to get a before shot this weekend. Then I'll pay down my 4 year loan to show a $300/$500 balance. Unfortunately the CU doesn't report until about the 4th day of the month so we won't find out for a while.

Hmm...Now you've got me thinking...

My EQ 08 score had a 10 point bump at the start of April that I attributed to my Discover card turning 1 year old but it might be because my installment loans hit the 80% threshold. I'll have to go back and do the math on what the balance ratio was at that time.

Re: Installment tradeline utilization thread

Revelate — Sat, 06 Jun 2015 15:04:08 GMT

@jamie123 wrote:
Not that you are long winded or anything Rev......Are you theorizing that the installment loan "sweet spot" is reached when the aggregate of installment loan remaining balance to starting balance ratio reaches 66%?

I tend to agree with that argument. From what I've learned, EQ seems to reach the "sweet spot" a little earlier than EX and TU. EQ seems to reach the "sweet spot" at around 80% as we saw in the thread a few days ago where that woman (Abby3) hit an 850 EQ with 3 (20%) years of her 15 year mortgage paid off. Her other scores at the time were EX 848 and TU 837. All of her reports had the same information, it is just that the CRAs treat installment pay off ratios a bit differently. I am surmising that your theory would work out in Abby3's case. When she gets her mortgage to 66% remaining balance (Or around 5 years paid off.) all her scores will be at 850.

You just demonstrated that your theory worked in your case, (Good job by the way!) so you are definitely on to something.

I'll see if I can test this but I'm not sure that I can. My 2 year loan is coming up on 50% and my 4 year loan will be at 75% soon so I guess I'm right at the cusp. I guess I'll have to fork out the $60 to pull the 3 reports to get a before shot this weekend. Then I'll pay down my 4 year loan to show a $300/$500 balance. Unfortunately the CU doesn't report until about the 4th day of the month so we won't find out for a while.

Hmm...Now you've got me thinking...

My EQ 08 score had a 10 point bump at the start of April that I attributed to my Discover card turning 1 year old but it might be because my installment loans hit the 80% threshold. I'll have to go back and do the math on what the balance ratio was at that time.

Actually that's a good point, I sort of made an offhand assertion there off the cuff but it could've been 80% or 75% or 70% or other numbers too. Not sure why I glommed on to that, I'll edit the post. Thank you for pointing out my sloppiness there, seriously!

I do think I made the case that there are breakpoints but more testing is really needed for dialing it in. Now that I know what I'm looking for it'll be easier to test over time I think. I do pickup the Alliant loan crossing 80% this month before any mortgage (or Venture app hah) that might skew it for an individual data point.

I'm not sure that there's a tick at 1 year, I did go over 1 year on the alliant loan and EQ didn't move. Same happened with USAA loan and I had the upward swing which to me suggests utilization than age. Did not cross an AAOA boundary either. Actually between the first and second pull my Sallie went over a year too on all bureaus and got the same non-movement for it on all 3... ooh nice find, thank you x2 Jamie!!

Edit: Missed a point, 3 years on a 15 year mortgage doesn't equiate to a 80% balance typically, interest hosed that . I'm going to go ask that actually heh.

Re: Installment tradeline utilization thread

vanillabean — Sat, 06 Jun 2015 15:35:06 GMT

Haha, it looks like iv (new mortgage, HELOC, credit card) and I (new mortgage, secured loan, credit card) are in a lot of trouble then. We are still digesting the first blow from the one-two punch, which was that "jamie made a compelling argument that it wasn't possible under a FICO 8 model to hit an 850 with an account under 2 years of age". I was just getting used to the AAoA being the lifeline to restore us to 850, and now you two rascals have pulled the rug from under the Christmas tree!

Re: Installment tradeline utilization thread

Revelate — Sat, 06 Jun 2015 15:48:44 GMT

@Anonymous-own-fico wrote:
Haha, it looks like iv (new mortgage, HELOC, credit card) and I (new mortgage, secured loan, credit card) are in a lot of trouble then. We are still digesting the first blow from the one-two punch, which was that "jamie made a compelling argument that it wasn't possible under a FICO 8 model to hit an 850 with an account under 2 years of age". I was just getting used to the AAoA being the lifeline to restore us to 850, and now you two rascals have pulled the rug from under the Christmas tree!

Laugh!

Well I got on this because in my own little world I had 4 installment lines open on my report, my auto loan closed and I took a hit, and then my original secured loan closed and I took another hit. That sucked.

What I'm hoping to get out of this data over time is a better way for score optimization: I think we're all pretty sold on the fact you should have some installment lines on your report, but what if the best method is to get not only the smallest but the longest time period loan you can (I'm looking at you DCU!), immediately pay it to X% for an even better boost and then let it coast?

For that matter can this calculation be on one installment loan or do you need two? Lot of good stuff can come out of this analysis I think.

I've realized I don't care for my USAA secured loan, wasn't as smart as possible opening that the last time around so I'm playing some games with it now on the way to paying it and closing the underlying CD. It's also possible that a mortgage may be counted outside of that altogether... the reasons stated on scorecards don't matter much but I've seen a mix of "non-mortgage installment" and "combination of mortgage and non-mortgage" in various places; I should go look at that again.

Course now that I'm in process of a mortgage I should be able to test that too... rationally mortgages should be held seperate, the dollar values of them would dwarf even auto loans from a calculation perspective and the vast majority of UW I would suspect absolutely count it as a different asset class. If it doesn't, well that'll bring my testing to a close tout suite, can't afford to prepay that appreciably heh, and that's a useful datapoint too in several regards.

Re: Installment tradeline utilization thread

Revelate — Wed, 10 Jun 2015 05:54:43 GMT

Got a Transunion update for no reason; I know there's no other changes on my credit report other than the USAA payment - not pulling a 3B for this one heh.

706 -> 711

Interesting, when my secured installment loan closed 2/01/15 I went from 710 -> 705. Identical 5 points.

When my Auto loan closed before that I had dropped 11 points which suggests I might get to 722 by playing further with balances. Backtracking the utilization rates from when I had all 4 loans reporting:

- Before auto loan close: 16.36%

- Before secured loan close: 50.02%

I can only really get one more test in before mortgage (unless current offer falls apart), so going to see about bringing my current installment utilization down under 50% by making another prepayment to the USAA loan.

Also looking at the Experian data which kicked off this thread, the largest movement was on the FICO 8 models across the board, have theorized it counts for more in the recent versions of the algorithm.

ETA: If anyone finds a loan which when you make a pre-payment, moves the next payment date out in the future please let me know. Wells Fargo Dealer Services did this, and also DCU I know only allows 3 months pre-payment which sort of defeats the purpose unfortunately. I'm thinking the installment line FICO reindeer game can be made optimal by possibly taking out the longest year installment loan, prepaying down a percentage of the balance (non-principal payment btw) and pushing the date way out into the future and sitting on it. I'm testing USAA's this time by making a non-principal payment which I screwed up in their interface last time.

This probably wouldn't even need to be a secured one actually, any loan which reports and if you push a large payment changes your due date by [large payment / monthly payment = number of months due date pushed out] an appreciable margin, we could sit on a trivial balance by simply taking the loan out (minus any origination fee) and just turning around and paying it right back down to some minimal level.

Re: Installment tradeline utilization thread

jamie123 — Wed, 10 Jun 2015 06:32:06 GMT

The following screen grab is from my latest 3 report view on 6/9/15. If you look on the last recommendation on the right side concerning my installment loan balances being too high, it is the only con listed for all three CRAs.

I will be making a payment to get both of my 2 installment loan balances down and try to get rid of this message. What percentage should I pay the remaing balance down to? Currently one is at about 60% and one is at 80%. I was thinking that I should take them both to 50%. Thoughts?

Re: Installment tradeline utilization thread

Revelate — Wed, 10 Jun 2015 06:37:46 GMT

Neat, I should go check that on my reports on the various scores.

For giggles can you dump your current balance / starting balances here?

If you are game, can play with either individual tradeline or aggregate balance ones. I'm going aggregate first because of a lack of time pre-mortgage skew (if any) and will assume I can pick up individual ones sometime later with my alliant loan.

Wish I had known this earlier, the uptick in my EX trifecta score wasn't much but every little bit counts. Wasn't expecting to get a higher score as my mortgage process went on .

Re: Installment tradeline utilization thread

Revelate — Wed, 10 Jun 2015 06:44:56 GMT

Oh nevermind, mine are just consistent as hell. Interesting that mine shows up on Experian too and this was the post EX reported USAA payment so likely can do better than where I'm at utilization wise. Irritated by the mortgage or non-mortgage though, may be hosed for this line of testing and will need others to carry the torch.

Re: Installment tradeline utilization thread

Anonymous — Wed, 10 Jun 2015 06:52:48 GMT

I was thinking along those lines myself. But there's not much we can do other than pay down our new mortgages or installment loans. I would rather see my money in the bank & investments. I'm only in my house 3 yrs so you can imagine what that's doing to my report along with a 10 month old auto loan & a 8 month old moto loan. Looks like I will trade my car in when I've had it 2/3 yrs for the one I really want. And only got the moto loan for 10k to help my report. I can definitely pay down the moto to 50%. Didn't want it in the first place. Was listening to Fico advice. Thanks for all of your great info!

Re: Installment tradeline utilization thread

jamie123 — Wed, 10 Jun 2015 06:57:47 GMT

This is the current status of my installment loans:

SDFCU

Starting balance: $500

Current balance: $295

Opened: 7/2014

Term: 2 years

Alliant

Starting balance: $500

Current balance: $389

Opened: 6/2014

Term: 4 years

What do you think? Take them both down to $250?

Re: Installment tradeline utilization thread

Revelate — Wed, 10 Jun 2015 07:12:57 GMT

Hmm which data point were you going for on the installment tradeline? If it were me I'd step across that aggregate 66% possible boundary and see if I got a boost or not as it's right there. After that I'd go playing, probably by prepaying one down, probably the SDFCU one. Any idea if you make a regular payment above the amount listed whether the due date skips forward in months with either? Looks like you've been doing that some what on both loans.

Current stats:

Current	Original	Percentage remaining
295	500	59
389	500	77.8
684	1000	68.4

Re: Installment tradeline utilization thread

damnedanddetermined — Wed, 10 Jun 2015 10:18:57 GMT

Revelate~ I have a installment loan through my credit union that allows you to pre-pay and moves the due date (month) ahead. I have a $6K secured loan that I play with each month. I have it paid down about 40-45% and payed ahead til October. Not sure if its done anything score wise yet, but it sure is fun playing with the banks money

Re: Installment tradeline utilization thread

damnedanddetermined — Wed, 10 Jun 2015 10:47:55 GMT

I wish myfico updated the similiator every month when my 24.95 is due Sure would be nice. Or does this happen when buying yet another credit report? Would love to see my installment loan advice!

Re: Installment tradeline utilization thread

Revelate — Wed, 10 Jun 2015 23:47:09 GMT

@damnedanddetermined wrote:
Revelate~ I have a installment loan through my credit union that allows you to pre-pay and moves the due date (month) ahead. I have a $6K secured loan that I play with each month. I have it paid down about 40-45% and payed ahead til October. Not sure if its done anything score wise yet, but it sure is fun playing with the banks money

Which CU if so? If I can figure out some of this I'll happily temporarily damage my scorecard once my mortgage is sorted .

Re: Installment tradeline utilization thread

Revelate — Wed, 10 Jun 2015 23:48:19 GMT

@damnedanddetermined wrote:
I wish myfico updated the similiator every month when my 24.95 is due Sure would be nice. Or does this happen when buying yet another credit report? Would love to see my installment loan advice!

Believe it happens when you buy another report, that would be a nice feature I agree but I think it looks at data rather than just score... the monitoring updates are just score and more changes go on beyind the scenes (and the services report differently) so really couldn't back into the new report unfortunately.

Re: Installment tradeline utilization thread

jamie123 — Thu, 11 Jun 2015 21:09:46 GMT

@Revelate wrote:
Hmm which data point were you going for on the installment tradeline? If it were me I'd step across that aggregate 66% possible boundary and see if I got a boost or not as it's right there. After that I'd go playing, probably by prepaying one down, probably the SDFCU one. Any idea if you make a regular payment above the amount listed whether the due date skips forward in months with either? Looks like you've been doing that some what on both loans.

Current stats:

Current Original Percentage remaining
295 500 59
389 500 77.8
684 1000 68.4

No, I haven't made any extra payments on either loan. I just setup auto pay from the beginning of the term and it has taken care of itself.

With my calculations, next month's (July 1st) auto pay will take me to 65.2% total utilization. That's a bit too close to the 66% we are testing for in my opinion. I think that I should make an extra $10 payment on my Alliant 4 year loan. That will take me to 64.2% of overall utilization for these 2 installment loans. Your thoughts? More money? $20?

As far as I know the term will decrease if extra payments are made on these loans.

The following month I want them both paid to 50% UTI to ensure I pick up any extra points that installment UTI might provide for my mortgage app that I hope will happen sometime in late August or September.

Re: Installment tradeline utilization thread

vanillabean — Thu, 11 Jun 2015 23:21:38 GMT

@jamie123 wrote:
Not that you are long winded or anything Rev......Are you theorizing that the installment loan "sweet spot" is reached when the aggregate of installment loan remaining balance to starting balance ratio reaches 66%?

I was just reminded that "DW had an EX 08 of 850 at a time when our mortgage balance was higher than 70%."

Re: Installment tradeline utilization thread

Revelate — Fri, 12 Jun 2015 14:05:36 GMT

@jamie123 wrote:
@Revelate wrote:
Hmm which data point were you going for on the installment tradeline? If it were me I'd step across that aggregate 66% possible boundary and see if I got a boost or not as it's right there. After that I'd go playing, probably by prepaying one down, probably the SDFCU one. Any idea if you make a regular payment above the amount listed whether the due date skips forward in months with either? Looks like you've been doing that some what on both loans.

Current stats:

Current Original Percentage remaining
295 500 59
389 500 77.8
684 1000 68.4
No, I haven't made any extra payments on either loan. I just setup auto pay from the beginning of the term and it has taken care of itself.

With my calculations, next month's (July 1st) auto pay will take me to 65.2% total utilization. That's a bit too close to the 66% we are testing for in my opinion. I think that I should make an extra $10 payment on my Alliant 4 year loan. That will take me to 64.2% of overall utilization for these 2 installment loans. Your thoughts? More money? $20?

As far as I know the term will decrease if extra payments are made on these loans.

The following month I want them both paid to 50% UTI to ensure I pick up any extra points that installment UTI might provide for my mortgage app that I hope will happen sometime in late August or September.

Pay them both down to like 10% next month or something if we're talking mortgage. I took a non-trivial FICO 8 drop when my nearly paid off loans closed, and we do see that EX 98 moved on this most recent test which is actually important from a mortgage perspective. FrugalQ made a comment on the mortgage forum today that her DH got slapped hard on his EX 98 which was his mid score when a loan reported paid and dropped them an entire tier below the magic 680 line.

For now, sure kick an extra yuppie foodstamp to it.

There is usually (with most lenders) the ability to either do a payment to principal or a regular payment: in this case we want regular payment. What I have seen on some lenders is if I pay N x Payment, I move N months forward on the payment cycle. Does decrease the term in as much as I wouldn't be paying for it as long (because not as much interest would accrue) but the question is how far in advance (if any) it's allowed to be paid.

WFDS: I paid, my date was pushed out 1.5 years at one point.

DCU: I can pay up to 3 months in advance, and if I overpay that, they send me a nasty gram and set it back to 3 months manually.

Others not sure about, what I'm looking for is some lender that will allow me to make a regular payment and push the date further out. I'm testing with USAA now, I'd be very interested if you kick extra to Alliant / SDFCU pre-mortgage what their due dates are.

WFDS for example I didn't have to make any payment for 18 months, and so I could just let it coast. The goal in this would be to find a lender that we can take the loan out (secured or not really doesn't matter other than origination fee) and then turn right around and pay it right back down to a few percent and then just let it sit there quietly for years without our having to touch it (maybe a $1 payment to refresh the balance from a tradeline activity perspective occasionally) and get all the benefit to installment loan utilization while paying some trivial interest rate. That's the hope anyway.

ETA: I see that my USAA payment did update, $497.30 principal $2.70 interest, but I can't see from my mobile phone what the next due date is, just that my May 22 payment due is zero. Will check when I get home in a few hours.

Re: Installment tradeline utilization thread

Revelate — Fri, 12 Jun 2015 14:08:32 GMT

Ahaha, USAA works! Or appears to, let's see if I get a nasty gram vis a vis DCU in the coming days, but here's a cut and paste of what I mean... now I wish I hadn't done the silly principal payment earlier, live and learn heh. Hopefully can find a 5+ year term on a smaller sized loan that can try these reindeer games on. CU Share Secured loans are definitely more flexible too than the secured CD ones like USAA if you need the underlying cash for whatever reason.