topic Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes: in Understanding FICO® Scoring

Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Thu, 03 Sep 2020 18:21:43 GMT

I have an auto loan from Alliant. I got the loan in January 2019 and have been paying it down quickly.

Original loan amount - $30,251
Alliant updates balances on last day of month; updated balance appears on reports 1-3 days later
7/31/2020 Balance - $5500 (18.18% remaining)
8/31/2020 Balance - $3000 (9.92% remaining)

So I passed under 10% "utilization." Updated installment loan was the only change from 9/1 to 9/3

FICO 8 changes:

EX^4

EQ^8
TU^7

The loan is paid ahead until 1/25/2024

I will pay it down to precisely 8.9% for 9/30 reporting and see if/what additional points I gain for hitting 8.9%.

Everybody's profile is different. This is just my data point.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

Trudy — Thu, 03 Sep 2020 18:36:24 GMT

Is this your only installment account?

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Thu, 03 Sep 2020 18:59:48 GMT

@Trudy wrote:
Is this your only installment account?

Yes

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

SouthJamaica — Thu, 03 Sep 2020 19:02:08 GMT

@CH-7-Mission-Accomplished wrote:
I have an auto loan from Alliant. I got the loan in January 2019 and have been paying it down quickly.
Original loan amount - $30,251
Alliant updates balances on last day of month; updated balance appears on reports 1-3 days later
7/31/2020 Balance - $5500 (18.18% remaining)
8/31/2020 Balance - $3000 (9.92% remaining)

So I passed under 10% "utilization." Updated installment loan was the only change from 9/1 to 9/3
FICO 8 changes:
EX^4
EQ^8
TU^7

The loan is paid ahead until 1/25/2024

I will pay it down to precisely 8.9% for 9/30 reporting and see if/what additional points I gain for hitting 8.9%.

Everybody's profile is different. This is just my data point.

Cool. If this is your only open loan then you should see a nice spike in your FICO 8 and 9 scores when you get it down safely to 9%.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

Anonymous — Fri, 04 Sep 2020 02:43:28 GMT

Interesting that the OP saw point gains when no (that I know of) threshold was crossed. Anyone think it could be a false positive and caused by something else? If not, does anyone have a guess as to where the breakpoint was? I agree with SJ that nice gains will be seen once approximately another percentage point is paid down and reports.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Fri, 04 Sep 2020 02:51:47 GMT

The points increase was clearly due to passing through 18% to 9.9%, but I'm pretty sure it was the 9.9%. It's too late to find out now. I'm interested to see if hitting 8.9% makes a difference. Since my next payment isn't due until 2024, I will gradually pay this thing down to say 4.9% and then leave it alone as it is my only installment loan. I will ride out the last remaining balance until the payoff date.

What will be interesting to me is to see if something more happens by falling from 9.9% to 8.9%.

We are kind of splitting hairs here ...... but nobody can guarantee that somebody else's profile will react the same way as theirs did.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

Anonymous — Fri, 04 Sep 2020 05:41:54 GMT

My understanding (SJ can chime in on this) is that crossing the 8.9% threshold on aggregate installment loan utilization usually results in an increase of at least twice, perhaps even 3X what you saw from the utilization drop you mentioned in the original post. I also the 8.9% threshold point at this stage of the game has been tested many times and essentially confirmed to be significant... so I don't really think it's all too profile dependent. Perhaps signal strength of the threshold could matter more/less depending on profile, that's not out of the question. But, if 8.9% is a confirmed significant point, it would just seem odd to me that 1% difference at 9.9% would also be noteworthy. That's not to say that it can't, but to me that doesn't really feel probable. I would think that more people that have paid down their loans in a more "traditional" way of one identical payment per month that have seen the balance slowly/steadily drop would have found a data point crossing 9.9% if it indeed is a thing.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

Duke_Nukem — Fri, 04 Sep 2020 13:20:33 GMT

@CH-7-Mission-Accomplished wrote:
I have an auto loan from Alliant. I got the loan in January 2019 and have been paying it down quickly.
Original loan amount - $30,251
Alliant updates balances on last day of month; updated balance appears on reports 1-3 days later
7/31/2020 Balance - $5500 (18.18% remaining)
8/31/2020 Balance - $3000 (9.92% remaining)

So I passed under 10% "utilization." Updated installment loan was the only change from 9/1 to 9/3
FICO 8 changes:
EX^4
EQ^8
TU^7

The loan is paid ahead until 1/25/2024

I will pay it down to precisely 8.9% for 9/30 reporting and see if/what additional points I gain for hitting 8.9%.

Everybody's profile is different. This is just my data point.

Was there any change in your mortgage scores, too? I suspect not, but curious.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

SouthJamaica — Fri, 04 Sep 2020 14:00:47 GMT

@Anonymous wrote:
Interesting that the OP saw point gains when no (that I know of) threshold was crossed. Anyone think it could be a false positive and caused by something else?

Yes it could have been caused by something else. But who knows in this crazy world of FICO scoring. I personally don't recall seeing any gain by paying down in that neighborhood, but maybe OP did.

If not, does anyone have a guess as to where the breakpoint was?

While I noticed some slight gains on the way down, I never saw anything definitely attributable to the loan payoff until I got down to 9%. But as you may recall, ever since I've been drinking the MyFICO koolaid I have had a fairly busy profile. And it is only in the last 2 years or so that I've had daily access to experian.com, which has definitely enhanced by observation capabilities.

I agree with SJ that nice gains will be seen once approximately another percentage point is paid down and reports.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

SouthJamaica — Fri, 04 Sep 2020 14:05:08 GMT

@Anonymous wrote:
My understanding (SJ can chime in on this) is that crossing the 8.9% threshold on aggregate installment loan utilization usually results in an increase of at least twice, perhaps even 3X what you saw from the utilization drop you mentioned in the original post.

In my case I got very few points on the way down from 90% to 14%, but when I made the next move to 9% I got around 25-30 points as I recall. And I believe most other folks have reported similar numbers. Personally I don't think 9.9% cuts it, because I believe that gets rounded up to 10%.

I also the 8.9% threshold point at this stage of the game has been tested many times and essentially confirmed to be significant... so I don't really think it's all too profile dependent.

Agreed

Perhaps signal strength of the threshold could matter more/less depending on profile, that's not out of the question. But, if 8.9% is a confirmed significant point, it would just seem odd to me that 1% difference at 9.9% would also be noteworthy. That's not to say that it can't, but to me that doesn't really feel probable. I would think that more people that have paid down their loans in a more "traditional" way of one identical payment per month that have seen the balance slowly/steadily drop would have found a data point crossing 9.9% if it indeed is a thing.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

Anonymous — Fri, 04 Sep 2020 19:04:59 GMT

@CH-7-Mission-Accomplished wrote:
I have an auto loan from Alliant. I got the loan in January 2019 and have been paying it down quickly.
Original loan amount - $30,251
Alliant updates balances on last day of month; updated balance appears on reports 1-3 days later
7/31/2020 Balance - $5500 (18.18% remaining)
8/31/2020 Balance - $3000 (9.92% remaining)

So I passed under 10% "utilization." Updated installment loan was the only change from 9/1 to 9/3
FICO 8 changes:
EX^4
EQ^8
TU^7

The loan is paid ahead until 1/25/2024

I will pay it down to precisely 8.9% for 9/30 reporting and see if/what additional points I gain for hitting 8.9%.

Everybody's profile is different. This is just my data point.

On what dates did you pull those Fico scores? You said the updates reported 1-3 days after 8/31. So one of them reported on 9/1 and you must be comparing it with a score in August. But then the change in score might be due to aging.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Fri, 04 Sep 2020 19:38:33 GMT

@Anonymous wrote:
@CH-7-Mission-Accomplished wrote:
I have an auto loan from Alliant. I got the loan in January 2019 and have been paying it down quickly.
Original loan amount - $30,251
Alliant updates balances on last day of month; updated balance appears on reports 1-3 days later
7/31/2020 Balance - $5500 (18.18% remaining)
8/31/2020 Balance - $3000 (9.92% remaining)

So I passed under 10% "utilization." Updated installment loan was the only change from 9/1 to 9/3
FICO 8 changes:
EX^4
EQ^8
TU^7

The loan is paid ahead until 1/25/2024

I will pay it down to precisely 8.9% for 9/30 reporting and see if/what additional points I gain for hitting 8.9%.

Everybody's profile is different. This is just my data point.

On what dates did you pull those Fico scores? You said the updates reported 1-3 days after 8/31. So one of them reported on 9/1 and you must be comparing it with a score in August. But then the change in score might be due to aging.

I pull my scores every day. On 9/1 none of the scores had updated (car balance was same as last month), then on 9/2 EX updated with the paid down balance and change in score, and then on 9/3 the last two bureaus updated the new lower balance and updated the scores. There were no other changes.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Fri, 04 Sep 2020 19:53:26 GMT

@Duke_Nukem wrote:
@CH-7-Mission-Accomplished wrote:
I have an auto loan from Alliant. I got the loan in January 2019 and have been paying it down quickly.
Original loan amount - $30,251
Alliant updates balances on last day of month; updated balance appears on reports 1-3 days later
7/31/2020 Balance - $5500 (18.18% remaining)
8/31/2020 Balance - $3000 (9.92% remaining)

So I passed under 10% "utilization." Updated installment loan was the only change from 9/1 to 9/3
FICO 8 changes:
EX^4
EQ^8
TU^7

The loan is paid ahead until 1/25/2024

I will pay it down to precisely 8.9% for 9/30 reporting and see if/what additional points I gain for hitting 8.9%.

Everybody's profile is different. This is just my data point.

Was there any change in your mortgage scores, too? I suspect not, but curious.

No, the three mortgage scores are the same.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Fri, 04 Sep 2020 20:12:07 GMT

I just checked the FICO 9 changes. They are even more staggering.

FICO Score 9

EQ 814 to 829 (up 15)

TU 817 to 836 (up 19)

EX 785 to 793 (up 8)

I double checked and there were no other significant changes aside from one more month of AAoA's.

I didn't do the loan paydown with any thoughts of seeing the effects on score so somewhere between 18.18 and 9.92% is where a marker was passed. If I were guessing I would say going under 10%. Let's see what happens when I hit exactly 8.9% next month.

My profile and scores almost never change. Sometimes they stay the same for a year. I only let one or two revolvers report a $5 balance.

I did see big jumps in May/June as my remaining IIB accounts rolled off.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Fri, 04 Sep 2020 20:12:46 GMT

Yes the only installment account.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

Anonymous — Fri, 04 Sep 2020 21:15:35 GMT

@CH-7-Mission-Accomplished wrote:
Original loan amount - $30,251

Just to make sure: Is that how it reports on each of your CR's?

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

CH-7-Mission-Accomplished — Fri, 04 Sep 2020 21:17:05 GMT

@Anonymous wrote:
@CH-7-Mission-Accomplished wrote:
Original loan amount - $30,251

Just to make sure: Is that how it reports on each of your CR's?

Yes, it's the same on all three bureaus.

Re: Auto Loan Dropped from 18.18% to 9.92% Utilization. FICO 8 changes:

Anonymous — Thu, 17 Sep 2020 05:57:06 GMT

You don’t have to hit 8.9%, you have to hit 9%. And yes, we can guarantee you you will see a change when you hit 9% B/L, and it will be more significant by far than what you just saw.

The 9% B/L aggregate installment threshold is consistent across version 8, it’s not profiles specific; we may not be able to tell you the magnitude, but we can tell you its going to happen at 9% and there are more threads and data points than you can count on it.

Edit: @CH-7-Mission-Accomplished apparently due to recent information you may only have to hit 9.4%.