topic Re: 3 installment loans in Understanding FICO® Scoring

3 installment loans

Anonymous — Thu, 09 Feb 2017 18:49:22 GMT

I have 3 installment loans.

Auto- balance $18,500 from $22,000

Sofi- balance $17,000 from $25,800

DCU Personal Loan balance $9500 from $10,000

I am going to payoff the DCU loan right now in full.

Question is, will this have any positive score impact?

Re: 3 installment loans

SouthJamaica — Thu, 09 Feb 2017 20:16:50 GMT

@Anonymous wrote:
I have 3 installment loans.

Auto- balance $18,500 from $22,000

Sofi- balance $17,000 from $25,800

DCU Personal Loan balance $9500 from $10,000

I am going to payoff the DCU loan right now in full.

Question is, will this have any positive score impact?

Unfortunately it won't have any seriously positive score impact in FICO 8. It would have more score impact to pay it down to $900, and use the other $900 towards the others.

But of course scores aren't everything.

Re: 3 installment loans

Anonymous — Thu, 09 Feb 2017 20:57:48 GMT

What?

Pay it down to $900 and use the other $900 towards the others?

I realize after doing research that there won't be any score increase.

Re: 3 installment loans

SouthJamaica — Thu, 09 Feb 2017 21:13:25 GMT

@Anonymous wrote:
What?

Pay it down to $900 and use the other $900 towards the others?

I realize after doing research that there won't be any score increase.

It is indeed possible that going from 77.8% aggregate installment utilization to 61.4% won't provide a score increase, but it is more likely to produce a score increase than going from 77.8% to 74.3%.

Re: 3 installment loans

Anonymous — Thu, 09 Feb 2017 22:42:21 GMT

SouthJ is right. He's saying that there is a scoring factor called total or aggregate installment utilization.

That's where, for your open installment loans, you add up all the amount you currently owe on them. (Call that CURRENT.) Then you divide that by the amount that the open loans were originally for. (Call that ORIGINAL.) Then you divide CURRENT by ORIGINAL and get a percent.

Your total installment utilization (TIU) is about 77%. If you pay off the DCU personal loan, it will be 74%. But if you keep all three loans open and pay down the aggregate debt by 10k, it will be 61%.

From a pure scoring perspective, you will get the biggest bang for your buck by keeping all three loans open as long as you can while paying the total amount down. Even if you don't get an instant benefit by going from 77% to 61%, you will eventually cross some breakpoint where you will. Certainly you will get some substantial relief when your TIU gets to be under 9%.

And as SJ said, there's often other considerations than pure scoring ones.

Re: 3 installment loans

Anonymous — Thu, 09 Feb 2017 22:45:04 GMT

@Anonymous wrote:
SouthJ is right. He's saying that there is a scoring factor called total or aggregate installment utilization.

That's where, for your open installment loans, you add up all the amount you currently owe on them. (Call that CURRENT.) Then you divide that by the amount that the open loans were originally for. (Call that ORIGINAL.) Then you divide CURRENT by ORIGINAL and get a percent.

Your total installment utilization (TIU) is about 77%. If you pay off the DCU personal loan, it will be 74%. But if you keep all three loans open and pay down the aggregate debt by 10k, it will be 61%.

From a pure scoring perspective, you will get the biggest bang for your buck by keeping all three loans open as long as you can while paying the total amount down. Even if you don't get an instant benefit by going from 77% to 61%, you will eventually cross some breakpoint where you will. Certainly you will get some substantial relief when your TIU gets to be under 9%.

And as SJ said, there's often other considerations than pure scoring ones.

Thank you very much for the detailed information. It helped me understand something I didn't know. Now I do.

Re: 3 installment loans

SouthJamaica — Thu, 09 Feb 2017 22:51:49 GMT

@Anonymous wrote:
@Anonymous wrote:
SouthJ is right. He's saying that there is a scoring factor called total or aggregate installment utilization.

That's where, for your open installment loans, you add up all the amount you currently owe on them. (Call that CURRENT.) Then you divide that by the amount that the open loans were originally for. (Call that ORIGINAL.) Then you divide CURRENT by ORIGINAL and get a percent.

Your total installment utilization (TIU) is about 77%. If you pay off the DCU personal loan, it will be 74%. But if you keep all three loans open and pay down the aggregate debt by 10k, it will be 61%.

From a pure scoring perspective, you will get the biggest bang for your buck by keeping all three loans open as long as you can while paying the total amount down. Even if you don't get an instant benefit by going from 77% to 61%, you will eventually cross some breakpoint where you will. Certainly you will get some substantial relief when your TIU gets to be under 9%.

And as SJ said, there's often other considerations than pure scoring ones.
Thank you very much for the detailed information. It helped me understand something I didn't know. Now I do.

That's why CGID is a "community leader". He's good at explaining stuff, and takes the time to do it

Re: 3 installment loans

Anonymous — Thu, 09 Feb 2017 22:59:58 GMT

@SouthJamaica wrote:
@Anonymous wrote:
@Anonymous wrote:
SouthJ is right. He's saying that there is a scoring factor called total or aggregate installment utilization.

That's where, for your open installment loans, you add up all the amount you currently owe on them. (Call that CURRENT.) Then you divide that by the amount that the open loans were originally for. (Call that ORIGINAL.) Then you divide CURRENT by ORIGINAL and get a percent.

Your total installment utilization (TIU) is about 77%. If you pay off the DCU personal loan, it will be 74%. But if you keep all three loans open and pay down the aggregate debt by 10k, it will be 61%.

From a pure scoring perspective, you will get the biggest bang for your buck by keeping all three loans open as long as you can while paying the total amount down. Even if you don't get an instant benefit by going from 77% to 61%, you will eventually cross some breakpoint where you will. Certainly you will get some substantial relief when your TIU gets to be under 9%.

And as SJ said, there's often other considerations than pure scoring ones.
Thank you very much for the detailed information. It helped me understand something I didn't know. Now I do.
That's why CGID is a "community leader". He's good at explaining stuff, and takes the time to do it

You did well for me as well southy!

Re: 3 installment loans

SouthJamaica — Thu, 09 Feb 2017 23:03:38 GMT

@Anonymous wrote:
@SouthJamaica wrote:
@Anonymous wrote:
@Anonymous wrote:
SouthJ is right. He's saying that there is a scoring factor called total or aggregate installment utilization.

That's where, for your open installment loans, you add up all the amount you currently owe on them. (Call that CURRENT.) Then you divide that by the amount that the open loans were originally for. (Call that ORIGINAL.) Then you divide CURRENT by ORIGINAL and get a percent.

Your total installment utilization (TIU) is about 77%. If you pay off the DCU personal loan, it will be 74%. But if you keep all three loans open and pay down the aggregate debt by 10k, it will be 61%.

From a pure scoring perspective, you will get the biggest bang for your buck by keeping all three loans open as long as you can while paying the total amount down. Even if you don't get an instant benefit by going from 77% to 61%, you will eventually cross some breakpoint where you will. Certainly you will get some substantial relief when your TIU gets to be under 9%.

And as SJ said, there's often other considerations than pure scoring ones.
Thank you very much for the detailed information. It helped me understand something I didn't know. Now I do.
That's why CGID is a "community leader". He's good at explaining stuff, and takes the time to do it
You did well for me as well southy!

Aw thanks

Re: 3 installment loans

Anonymous — Thu, 09 Feb 2017 23:46:04 GMT

SJ is da bomb.

Re: 3 installment loans

Revelate — Fri, 10 Feb 2017 13:37:00 GMT

Not that it matters much but DCU isn't one you can gimmick FICO wise with installment reindeer games; if it's your highest APR sure pay it, but not paying it off is only going to be a 3 month pause on things when we're talking trying to keep tradelines open for as long as possible.

If it's not highest APR pay something else imo .

Re: 3 installment loans

Anonymous — Fri, 10 Feb 2017 18:10:36 GMT

Not much to pay. Interest is really low on all of them.

DCU auto is 1.74%

DCU personal loan is 8.75%

SOFI personal loan is 11%

I think I will pay 5k principle on Sofi and $4500 on principle on DCU personal loan.

What do you mean by my famous words "reindeer games" with DCU? I don't understand.

Re: 3 installment loans

Revelate — Sat, 11 Feb 2017 06:35:03 GMT

@Anonymous wrote:
Not much to pay. Interest is really low on all of them.

DCU auto is 1.74%
DCU personal loan is 8.75%
SOFI personal loan is 11%

I think I will pay 5k principle on Sofi and $4500 on principle on DCU personal loan.

What do you mean by my famous words "reindeer games" with DCU? I don't understand.

Basically silly tricks one can play with one's credit report to boost one's FICO.

The Share Secure Loan trick is one such, and I've sort of referred to it as reindeer games for a while and it's sort of stuck with me and a few others heh.

Re: 3 installment loans

SouthJamaica — Sat, 11 Feb 2017 20:00:05 GMT

@Anonymous wrote:
Not much to pay. Interest is really low on all of them.

DCU auto is 1.74%
DCU personal loan is 8.75%
SOFI personal loan is 11%

I think I will pay 5k principle on Sofi and $4500 on principle on DCU personal loan.

What do you mean by my famous words "reindeer games" with DCU? I don't understand.

"Reindeer games" is a term coined by Revelate who pioneered a method for someone with no installment loans to improve his or her "credit mix" and join in the "reindeer games" from which Rudolph the rednosed reindeer had previously been excluded, without actually getting into serious debt like a mortgage or car loan.

The method, in a nutshell, is:

Join Alliant Credit Union, take out a $500+ savings account, take out a $500 share secured loan secured by the savings account with a 48 or 60 month term, decline or cancel autopay, transfer $455 from the savings account towards the loan balance bringing the balance down to $45. Pay that off slowly over the

balance of the term. Once that reports the positive effects will be felt.

What Revelate is now saying is that DCU doesn't report the payments like Alliant does... different institutions report differently. Some (apparently including DCU) can't be used to play the 'reindeer game' because once you make the $455 prepayment, they simply shorten the term of the loan, thus defeating the whole purpose.

Re: 3 installment loans

Anonymous — Sun, 12 Feb 2017 00:05:01 GMT

Hi SouthJ. I think Rev (and now others) use the term indeed for that, but also a bit more broadly to include any kind of silly gimmicky thing (a game) that one can do to improve one's score.

E.g. it is a bit silly that one becomes instantly much less risky by placing a cup of coffee on one card, if all your cards were at $0, but that's a trick that people like you and the insiders here know. Similarly it's a bit silly that if you have six credit cards that each have a cup of coffee on them, your whole mortgage future could be decided by paying off the coffee on five of the six cards -- but again it's a gimmick that the insiders here know.

All examples of playing silly games with CC and installment loan balances.

At some point (FICO 10 and beyond) much of that silliness (at least touching CCs) will get eliminated I imagine. But it will take years for FICO 10 and Vantage 4 (when they are eventually released) to become so widely adopted that the older stategies are no longer relevant. So I imagine we'll all still be playing RGs for several more years.

Re: 3 installment loans

SouthJamaica — Sat, 11 Feb 2017 21:38:41 GMT

@Anonymous wrote:
Hi SouthJ. I think Rev (and now others) use the term indeed for that, but also a bit more broadly to include any kind of silly gimmicky thing (a game) that one can do to improve one's score.

E.g. it is a bit silly that have one becomes instantly much less risky by placing a cup of coffee on one card, if all your cards were at $0, but that's a trick that people like you and the insiders here know. Similarly it's a bit silly that if you have six credit cards that each have a cup of coffee on them, your whole mortgage future could be decided by paying off the coffee on five of the six cards -- but again it's a gimmick that the insiders here know.

All examples of playing silly games with CC and installment loan balances.

At some point (FICO 10 and beyond) much of that silliness (at least touching CCs) will get eliminated I imagine. But it will take years for FICO 10 and Vantage 4 (when they are eventually released) to become so widely adopted that the older stategies are no longer relevant. So I imagine we'll all still be playing RGs for several more years.

Well I'm just glad to be able to join in the games, I've been an outsider so long, what with the red nose and all....

Re: 3 installment loans

jamie123 — Sat, 11 Feb 2017 23:54:14 GMT

Yes, unless you visit a credit forum like this one, you probably do not understand or know about the ins and outs of grooming your credit score. Once you visit and learn you become part of the clique that knows how to use these tricks or "games" to your advantage. And yes, our Esteemed Member Revelate was the originator of the "reindeer games" term used at MyFICO forums.

Re: 3 installment loans

Anonymous — Sun, 12 Feb 2017 00:40:43 GMT

@Anonymous wrote:
Hi SouthJ. I think Rev (and now others) use the term indeed for that, but also a bit more broadly to include any kind of silly gimmicky thing (a game) that one can do to improve one's score.

E.g. it is a bit silly that one becomes instantly much less risky by placing a cup of coffee on one card, if all your cards were at $0, but that's a trick that people like you and the insiders here know. Similarly it's a bit silly that if you have six credit cards that each have a cup of coffee on them, your whole mortgage future could be decided by paying off the coffee on five of the six cards -- but again it's a gimmick that the insiders here know.

All examples of playing silly games with CC and installment loan balances.

At some point (FICO 10 and beyond) much of that silliness (at least touching CCs) will get eliminated I imagine. But it will take years for FICO 10 and Vantage 4 (when they are eventually released) to become so widely adopted that the older stategies are no longer relevant. So I imagine we'll all still be playing RGs for several more years.

I use the term "reindeer games" CA's like to play with the folks in the rebuilding forums. But now I know what the term means when it comes to loans. In which I don't need to play.