topic Re: Installment utilization 40% in Understanding FICO® Scoring

Installment utilization 40%

SouthJamaica — Wed, 19 Aug 2020 15:52:51 GMT

I believe I detected this morning a minor FICO 8 installment utilization threshold at 40%.

I picked up a group of small loans a few months ago, have been gradually paying them off, and have been watching EX FICO 8 and 2 on a daily basis to see what happens as aggregate installment utilization slowly drops.

I expected something to happen when I crossed 50% but nothing happened.

Today I crossed 40%, going from 40.7% to 36.4%, and my EX FICO 8 -- which has been very stable -- increased 2 points.

(Something else happened the same day... a hard pull. Theoretically that might have muffled the impact. But I doubt it, because my EX inquiries are already so high that another HP wouldn't have done a thing).

Update 8/19/20: EQ FICO 8 increased by 6 points. TU FICO 8 didn't move.

Re: Installment utilization 40%

Anonymous — Wed, 12 Aug 2020 03:39:20 GMT

Interesting. I'm sure you're speaking of aggregate installment loan utilization. I'm curious of the individual utilization drops on the various loans as well, just for S&Gs.

Re: Installment utilization 40%

SouthJamaica — Wed, 12 Aug 2020 13:48:45 GMT

@Anonymous wrote:
Interesting. I'm sure you're speaking of aggregate installment loan utilization. I'm curious of the individual utilization drops on the various loans as well, just for S&Gs.

I have never found individual installment utilization to have any effect at all on anything. I monitor the actual current individual balances, but not the reported individual balances. The only reported (as opposed to actual current) figure I track is the total since that's the one that's score-moving.

Next step will be to see what, if anything, happens when I move from the 30's to the 20's.

When I did a comprehensive test of the paydown of a loan a few years back, I remember that there did appear to be discernible thresholds, but they were painfully minor in effect until I got below 10% when all of a sudden I was in the promised land.

Frankly, I would pay my current loans down to 9% today -- and forego learning about possible 19% and 29% thresholds -- if I had the cash on hand.

What are "S&G's"?

Re: Installment utilization 40%

Dmessina666 — Wed, 12 Aug 2020 12:40:28 GMT

lol........**bleep**s and giggles

Re: Installment utilization 40%

SouthJamaica — Wed, 12 Aug 2020 13:39:42 GMT

@Dmessina666 wrote:
lol........**bleep**s and giggles

No wonder I didn't know. I live a cloistered life

Re: Installment utilization 40%

Remedios — Wed, 12 Aug 2020 14:20:15 GMT

I got 7 points on EX when loan was at 90%, but nothing on TU and EX.

Following month, I got points on TU and EQ at 87%, nothing on EX

Loan is good for "testing" because nothing reports 7 days before it, and 5 days after it. Paid EX monitoring, and MF Premier.

Each scheduled payment is 2%, but I've been paying extra to see what happens.

Re: Installment utilization 40%

Anonymous — Wed, 12 Aug 2020 16:07:27 GMT

SJ have you ever found time to be a factor when it comes to installment loans outside of utilization? I know there are negative reason codes pertaining to length of time revolving accounts have been established, but what about installment loans?

Re: Installment utilization 40%

SouthJamaica — Wed, 12 Aug 2020 19:04:36 GMT

@Anonymous wrote:
SJ have you ever found time to be a factor when it comes to installment loans outside of utilization? I know there are negative reason codes pertaining to length of time revolving accounts have been established, but what about installment loans?

Well our revered gurus Thomas_Thumb and Revelate seem to feel that the age of a loan is a factor.

I personally don't think so, as I would find that kind of 'thinking' inconsistent with the 'snapshot' perspective normally exhibited by FICO algorithms.

But I've never had any loan long enough (since I've been paying attention to FICO) to develop any personal feeling about it one way or the other. My loans have all been young whippersnappers rather than venerable mortgages with whiskers.

Re: Installment utilization 40%

Thomas_Thumb — Thu, 13 Aug 2020 12:30:52 GMT

@SouthJamaica wrote:
I believe I detected this morning a minor FICO 8 installment utilization threshold at 40%.

I picked up a group of small loans a few months ago, have been gradually paying them off, and have been watching EX FICO 8 and 2 on a daily basis to see what happens as aggregate installment utilization slowly drops.

I expected something to happen when I crossed 50% but nothing happened.

Today I crossed 40%, going from 40.7% to 36.4%, and my EX FICO 8 -- which has been very stable -- increased 2 points.

(Something else happened the same day... a hard pull. Theoretically that might have muffled the impact. But I doubt it, because my EX inquiries are already so high that another HP wouldn't have done a thing).

By my definition, a score should change atleast 5 points with the attribute effectively isolated to be classified as a threshold. 2 or 3 point changes are noise and should be considered incidental. Otherwise, everything becomes a threshold and defining something as a threshold loses meaning.

Re: Installment utilization 40%

SouthJamaica — Thu, 13 Aug 2020 17:16:37 GMT

When my Equifax report caught up to the installment utilization change, my EQ FICO 8 increased 6 points, confirming my suspicion that crossing 40% does mean something.

Re: Installment utilization 40%

SouthJamaica — Thu, 13 Aug 2020 17:21:18 GMT

@Thomas_Thumb wrote:
@SouthJamaica wrote:
I believe I detected this morning a minor FICO 8 installment utilization threshold at 40%.

I picked up a group of small loans a few months ago, have been gradually paying them off, and have been watching EX FICO 8 and 2 on a daily basis to see what happens as aggregate installment utilization slowly drops.

I expected something to happen when I crossed 50% but nothing happened.

Today I crossed 40%, going from 40.7% to 36.4%, and my EX FICO 8 -- which has been very stable -- increased 2 points.

(Something else happened the same day... a hard pull. Theoretically that might have muffled the impact. But I doubt it, because my EX inquiries are already so high that another HP wouldn't have done a thing).

By my definition, a score should change atleast 5 points with the attribute effectively isolated to be classified as a threshold. 2 or 3 point changes are noise and should be considered incidental. Otherwise, everything becomes a threshold and defining something as a threshold loses meaning.

As a general rule, I agree with you, but in this case the EX score was extremely stable, sitting like a lump on a log despite lots of little things going on. Then on a clear day -- when nothing else happened but this -- it budged 2. Made me think there was a slight disturbance in the force.

Today, when my EQ report caught up to EX, the EQ FICO 8 jumped 6 points... again with nothing else of any significance going on. Will be interesting to see if TU FICO 8 confirms.

Re: Installment utilization 40%

ChemE_Bear — Thu, 13 Aug 2020 19:43:14 GMT

Huh, I'm not sure where the concept of "noise" in credit scores is coming from... I have never seen a change in my score that could not be attributed to some change in my file. I also got a couple of points going from >99% utilization on my loans to 98% utilization so I definitely think there are points to be gained in loan utilization outside of the big barriers of 65% and 9%.

Re: Installment utilization 40%

Anonymous — Fri, 14 Aug 2020 04:42:28 GMT

@ChemE_Bear wrote:
I also got a couple of points going from >99% utilization on my loans to 98% utilization so I definitely think there are points to be gained in loan utilization outside of the big barriers of 65% and 9%.

Unless you were doing some serious testing where the utilization threshold crossed was isolated from other profile factors (utilization, age of accounts, etc) there's no way of knowing where your "couple of points" gained came from and it's completely possible the the installment loan utilization [insignificant] drop wasn't a factor at all.

Re: Installment utilization 40%

ChemE_Bear — Wed, 19 Aug 2020 01:17:21 GMT

I follow my scores very closely, there was no crossing of thresholds for age of accounts and no change in credit card utilization.