topic Re: OK, so NOW what to expect???!!!! in Understanding FICO® Scoring

OK, so NOW what to expect???!!!!

Anonymous — Thu, 24 May 2018 01:59:00 GMT

OK, so here's the deal. I purchased a new home and moved into it last September. Not long afterward I realized I needed tools, lawn equipment, medium level repairs and other odds and ends to make the place "liveable" (IOW, some non-essentials such as funiture, shades, etc., etc., etc.). I was spending money I didn't have...I was spending CREDIT (as do so many others of us here after repairing our FICOs) and yes, I know my mistakes and vow (to myself) not to repeat them. Bottom line is I was about $25,000 in CC and other (meaning 2 small personal loans). Of course, I went on an app spree for Home Depot, Lowe's and other various "homey-types" of cards and have probably about 30 >2 yr inquiries and at this time...a 690'ISH (avg of the 3 majors) FICO.

Last week, I took out a $30,000 personal loan at BBVA Compass (17%, 5 yr term). I paid off ALL credit card balances (I had probably about 12 CC's with balances) and the 2 small personal loans.

QUESTION IS: Without providing too many other data points (b/c I really think I've given all of the most relevant ones to answer), what could I expect to see happen with my FICO in the short-term, mid-term and long-term assuming I stick as closely as possible to the AZEO strategy from here on out?

Re: OK, so NOW what to expect???!!!!

Anonymous — Thu, 24 May 2018 03:21:14 GMT

The most important data to provide here to give you a solid answer would be what your individal card balances and limits were before the payoff and where they currently sit. This will also provide us with the biggest score-impacting factor change, your aggregate utilization before/after.

Re: OK, so NOW what to expect???!!!!

Anonymous — Thu, 24 May 2018 04:18:39 GMT

@Anonymous wrote:
The most important data to provide here to give you a solid answer would be what your individal card balances and limits were before the payoff and where they currently sit. This will also provide us with the biggest score-impacting factor change, your aggregate utilization before/after.

@I have $89,000(ish) in unsecured CC limits aggregated (25 CCs and 12 had balances) and paid it all off w/the new CL (personal loan), all cards were either ZERO balance or under 50% except for one which was @ 70% utilization. I had $1200 total debt between two separate installment loans. All paid off now - went from four installments to three also, including my car loan. HTH?

Re: OK, so NOW what to expect???!!!!

Anonymous — Thu, 24 May 2018 04:28:26 GMT

Highest card at 70% helps a bit, but what still needs to be told is your aggregate utilization.

If you had $89k in limits, what was your total in balances? Take total balances and divide by total limits to get your aggregate utilization percentage "before" and then for your "after" is that percentage now 0% or do you have at least one balance reported, say 1%? The loans are quite secondary here to the discussion on utilization, as utilization easily impacts your profile 3x-4x as much in this example.

Re: OK, so NOW what to expect???!!!!

Anonymous — Thu, 24 May 2018 04:37:31 GMT

28% when I took the plunge. Now, probably at or below 4%.

Re: OK, so NOW what to expect???!!!!

Anonymous — Thu, 24 May 2018 22:00:31 GMT

@Anonymous wrote:
28% when I took the plunge. Now, probably at or below 4%.

You could gain maybe 20 points from crossing the 8.9% threshold in going from 28% to 4% aggregate utilization, then possibly another 10 points in taking a 70% utilization card down to nothing, so my guess would be around a 30 point gain, give or take.

Re: OK, so NOW what to expect???!!!!

Anonymous — Fri, 25 May 2018 01:26:42 GMT

You could gain maybe 20 points from crossing the 8.9% threshold in going from 28% to 4% aggregate utilization, then possibly another 10 points in taking a 70% utilization card down to nothing, so my guess would be around a 30 point gain, give or take.

That would be nice! Probably over a 3-6 month time period I assume.

Re: OK, so NOW what to expect???!!!!

Anonymous — Fri, 25 May 2018 01:44:22 GMT

@Anonymous
That would be nice! Probably over a 3-6 month time period I assume.

You'd actually see the score gain all at once, assuming you paid down your balance(s) all at the same time.

Utilization is a moment-in-time factor that has no memory. If your utilization drops and will result in a 30 point gain due to that drop, you'd see all 30 points all at once, not over a period of time.

Definitely report back and let us know how your scores improve.

Re: OK, so NOW what to expect???!!!!

Anonymous — Fri, 25 May 2018 02:09:00 GMT

Great info and feedback! Thank you....

Hypothetically, let's say next year I refi this personal loan I used to consolidate my other unsecured loans with a lower interest rate from another lender in awhile (that's the plan, btw)...would it help/hurt/other my FICO score?

Re: OK, so NOW what to expect???!!!!

Anonymous — Fri, 25 May 2018 02:18:29 GMT

It could only hurt your score. If it would and/or how much it does depends on your current installment loan utilization.

A refi involves taking a loan that's at < 100% utilization and replacing it with one that's at 100% utilization. If the current loan is at relatively high utilization, the refi with respect to installment loan utilization may not be a significant change. If the loan is substantially paid down, bringing it back up to 100% utilization could hurt some. It's also worth mentioning that outside of this factor you have to consider the inquiry associated with the loan along with the AoYA drop and potential AAoA drop.

Re: OK, so NOW what to expect???!!!!

Anonymous — Sat, 26 May 2018 03:09:21 GMT

OK, I just realized I'm leaving something out - potentially relevant to the "what next?" question. I'm in the "mid-sixties" annual income range and now, after acquiring this loan including my house and car notes, I've got a total debt of ~$163,500. With this DTI ratio and all of the above info I've offered, does this change your prediction in any way? Thanks again for your help and knowledge!

Re: OK, so NOW what to expect???!!!!

Anonymous — Sat, 26 May 2018 03:14:16 GMT

Income is not a factor known or considered by the FICO algorithm, so DTI with respect to your score doesn't matter.

Re: OK, so NOW what to expect???!!!!

Anonymous — Sat, 26 May 2018 03:17:38 GMT

@Anonymous wrote:
Income is not a factor known or considered by the FICO algorithm, so DTI with respect to your score doesn't matter.

OK, I guess I knew that. More specifically, sitting across the desk from a potential lender/decision-maker with a hard-pull in hand, is my DTI good, within reasonable limits null, or bad in your opinion?

Re: OK, so NOW what to expect???!!!!

jamie123 — Sat, 26 May 2018 11:21:48 GMT

@Anonymous wrote:
@Anonymous wrote:
Income is not a factor known or considered by the FICO algorithm, so DTI with respect to your score doesn't matter.
OK, I guess I knew that. More specifically, sitting across the desk from a potential lender/decision-maker with a hard-pull in hand, is my DTI good, within reasonable limits null, or bad in your opinion?

You need to actually find your DTI ratio. You do this by adding up all your monthly credit payments. (Mortgage, Auto Loans, Installment Loans, Student Loans, Credit Cards, Etc.) (Not electricity, food, gas, cable, Etc.) Use the minimum payment amount for credit cards.

You then divide your total monthly payment amount by your total monthly gross income. This will give you your "Debt To Income" ratio as a percent of income.

If this number is over 40% you might be considered "at risk" depending on the individual lender's standards. This should only be considered a ballpark estimation of credit worthiness because lenders standards can vary quite a bit.

Re: OK, so NOW what to expect???!!!!

Appleman — Sat, 26 May 2018 12:02:47 GMT

I think BBS is correct in his assesment of your score improvement. I could see 40 points happening but we would all like to hear what does happen to your scores.

If you do not have a FREE Credit Sesame account, I would recommend that to see the rough estimate of your current DTI level. That is where I follow my DTI and it is fairly accurate according to my records.

With the personal loan at 17% there is hope that you could improve that with a refinance once your score improves. There are plenty of sites that allow you to see if you pre-qualify with a SP and you may also want to see if a CU can help you out.

Any extra money you put toward the personal loan is like getting a 17% return on investment. Hard to hit that in any market.

Congrats on wiping out some credit card debt.

Re: OK, so NOW what to expect???!!!!

Anonymous — Sun, 27 May 2018 02:11:14 GMT

OK, so here's where we're at today, and it's quite interesting. I have Credit Karma as well as all of the other major credit monitor apps. Specifically, I just noticed today I had a notice from WalletHub (supposedly it updates the FAKO every single day and it seems to do just that). I opened it up and noticed all of the major CC payments I made had posted (but not all) and my FAKO went from 639 to 699...mind you, this is only after a few days since the personal loan I took out. Also, the new installment loan ($30K) hasn't appeared, nor have the other two installment loans show a zero balance yet either.

I promised to keep BBS updated, so here ya go. Lots more needs to be reported at this point, including all of my cards with smaller balancing not reporting as "zero balance" yet. I'm expecting in the end to lose some of those points I just received fairly soon. Also, I don't have any FICO reporting to refer to as of right now either.

Re: OK, so NOW what to expect???!!!!

Anonymous — Sun, 27 May 2018 03:50:02 GMT

Do you have access to any of your FICO scores? How about creditscorecard.com? Have you done any CCT $1 trials?

Re: OK, so NOW what to expect???!!!!

Anonymous — Mon, 28 May 2018 00:58:49 GMT

@Anonymous wrote:
Do you have access to any of your FICO scores? How about creditscorecard.com? Have you done any CCT $1 trials?

Through various cards I have access to all FICOs but I have to wait for them to update. Another update though: Credit Karma updated just today and my big balances have updated to zero but there are still some smaller balances still reporting AND the new TL ($30k) isn't reporting just yet. According to the app my TU FAKO jumped 58 points to 698 and my EQ FAKO jumped 64 points to 714. As the other zero balances report (about 6 are still showing small balances of less than $1000) and the new TL reports, what would you assume I should expect in the short-term?

Just pulled from CreditScore.Com

Anonymous — Mon, 28 May 2018 01:10:57 GMT

Experian FICO (Current)