topic Re: Installment Loan Threshold in Understanding FICO® Scoring

Installment Loan Threshold

Anonymous — Mon, 26 Apr 2021 14:02:47 GMT

Good Morning, I just refinanced my auto loan to a lower rate. Now it's going to show "High Loan Balance."

Are there threshold you cross for FICO Scoring that helps credit scores? Or is the only threshold 8.9% utilization and any percentage above count the same?

Re: Installment Loan Threshold

Horseshoez — Mon, 26 Apr 2021 14:10:38 GMT

@Anonymous wrote:
Good Morning, I just refinanced my auto loan to a lower rate. Now it's going to show "High Loan Balance."

Are there threshold you cross for FICO Scoring that helps credit scores? Or is the only threshold 8.9% utilization and any percentage above count the same?

I've run across a few threads on this issue, don't quote me on the thresholds, but if I recall correctly they are something like:

<89%
<69%
<49%
<29%
<19% (I think this one is unproven at this point but I'm pretty sure I've seen a datapoint or two suggesting this threshold exists)
<9%
<5% (this one is still in question as well)

Re: Installment Loan Threshold

Anonymous — Mon, 26 Apr 2021 14:18:10 GMT

Perfect, Thank you! I vaguely remember something about 89% and 69%, but wasn't entirely sure. Thanks again!

Re: Installment Loan Threshold

SouthJamaica — Mon, 26 Apr 2021 15:28:14 GMT

@Anonymous wrote:
Good Morning, I just refinanced my auto loan to a lower rate. Now it's going to show "High Loan Balance."

Are there threshold you cross for FICO Scoring that helps credit scores? Or is the only threshold 8.9% utilization and any percentage above count the same?

IMHO the only significant threshold is getting down to 9%.

There may be very slight improvements as you go down, like 2 or 3 points here and there, but I didn't experience any solid evidence of any, and I've tested for them 3 or 4 times.

Re: Installment Loan Threshold

Anonymous — Mon, 26 Apr 2021 15:42:56 GMT

Take heed to what @SouthJamaica has to say on this as he had a running post showing results. IIRC it showed High Balances all the way down to 9%.

Re: Installment Loan Threshold

OmarGB9 — Mon, 26 Apr 2021 15:59:02 GMT

@Horseshoez wrote:
@Anonymous wrote:
Good Morning, I just refinanced my auto loan to a lower rate. Now it's going to show "High Loan Balance."

Are there threshold you cross for FICO Scoring that helps credit scores? Or is the only threshold 8.9% utilization and any percentage above count the same?
I've run across a few threads on this issue, don't quote me on the thresholds, but if I recall correctly they are something like:
<89%
<69%
<49%
<29%
<19% (I think this one is unproven at this point but I'm pretty sure I've seen a datapoint or two suggesting this threshold exists)
<9%
<5% (this one is still in question as well)

Those are for credit cards. Installment loans have far less, just <9% and under 69% I believe. @Anonymous knows more.

Re: Installment Loan Threshold

SouthJamaica — Mon, 26 Apr 2021 16:34:59 GMT

@Anonymous wrote:
Take heed to what @SouthJamaica has to say on this as he had a running post showing results. IIRC it showed High Balances all the way down to 9%.

Yes indeed. I kept getting a negative reason code for 'high installment loan balances', even when I was down to only 14%. Only when I got it down to 9% did I get my bonus.

Re: Installment Loan Threshold

Anonymous — Tue, 27 Apr 2021 00:52:11 GMT

@OmarGB9 wrote:
@Horseshoez wrote:
@Anonymous wrote:
Good Morning, I just refinanced my auto loan to a lower rate. Now it's going to show "High Loan Balance."

Are there threshold you cross for FICO Scoring that helps credit scores? Or is the only threshold 8.9% utilization and any percentage above count the same?
I've run across a few threads on this issue, don't quote me on the thresholds, but if I recall correctly they are something like:
<89%
<69%
<49%
<29%
<19% (I think this one is unproven at this point but I'm pretty sure I've seen a datapoint or two suggesting this threshold exists)
<9%
<5% (this one is still in question as well)
Those are for credit cards. Installment loans have far less, just <9% and under 69% I believe. @Anonymous knows more.

^^^^ @OmarGB9 correct those are for credit cards, and the 5% is maybe the most proven one. For loans, it's 10% and 65%, I believe, although there are some other small ones like 87 or 88%.

Re: Installment Loan Threshold

TravelNut — Wed, 28 Apr 2021 14:23:33 GMT

@Anonymous wrote:
@OmarGB9 wrote:
@Horseshoez wrote:
@Anonymous wrote:
Good Morning, I just refinanced my auto loan to a lower rate. Now it's going to show "High Loan Balance."

Are there threshold you cross for FICO Scoring that helps credit scores? Or is the only threshold 8.9% utilization and any percentage above count the same?
I've run across a few threads on this issue, don't quote me on the thresholds, but if I recall correctly they are something like:
<89%
<69%
<49%
<29%
<19% (I think this one is unproven at this point but I'm pretty sure I've seen a datapoint or two suggesting this threshold exists)
<9%
<5% (this one is still in question as well)
Those are for credit cards. Installment loans have far less, just <9% and under 69% I believe. @Anonymous knows more.
^^^^ @OmarGB9 correct those are for credit cards, and the 5% is maybe the most proven one. For loans, it's 10% and 65%, I believe, although there are some other small ones like 87 or 88%.

@Anonymous For the loans on the 10% & 65% I assume that is aggregate and not individual?

I just had an installment loan go paid in full and then closed so my Loan utilization went from 63% to 74% which made me lose up to 6 points accross my mortgage scores. I had 4 opened loans and now I'm down to 3 open which is why my Utilization went up. Sounds like to recapture those points would be to bring the Loan util down to 65%?

Re: Installment Loan Threshold

805orbust — Wed, 28 Apr 2021 21:52:30 GMT

@SouthJamaica I was following that thread a few years ago when you started it... Didn't realize you had that reason code show up as far down as 14%. I remember the impact as you passed thresholds. You only saw a few points gain as you passed them?

I don't know why I remember the gains being larger. May have just been excitement as I purchased a car at the same time and seeing what you were doing literally made me toss extra money at it and knock it out early. 😆

Re: Installment Loan Threshold

SouthJamaica — Wed, 28 Apr 2021 22:12:32 GMT

@805orbust wrote:
@SouthJamaica I was following that thread a few years ago when you started it... Didn't realize you had that reason code show up as far down as 14%. I remember the impact as you passed thresholds. You only saw a few points gain as you passed them?

I don't know why I remember the gains being larger. May have just been excitement as I purchased a car at the same time and seeing what you were doing literally made me toss extra money at it and knock it out early. 😆

The score increases, when they did occur, were so slight that it was never clear if they were attributable to the loan balance decreases or not. I don't think I was subscribed to experian.com at the time, so I didn't have access to daily movements.

I remember feeling quite deflated when I'd gotten it down to 14% and was still getting the negative reason code.

I had misinterpreted the "reindeer games" theory pioneered by @Revelate

Re: Installment Loan Threshold

Anonymous — Wed, 28 Apr 2021 22:57:19 GMT

@TravelNut wrote:
@Anonymous wrote:
@OmarGB9 wrote:
@Horseshoez wrote:
@Anonymous wrote:
Good Morning, I just refinanced my auto loan to a lower rate. Now it's going to show "High Loan Balance."

Are there threshold you cross for FICO Scoring that helps credit scores? Or is the only threshold 8.9% utilization and any percentage above count the same?
I've run across a few threads on this issue, don't quote me on the thresholds, but if I recall correctly they are something like:
<89%
<69%
<49%
<29%
<19% (I think this one is unproven at this point but I'm pretty sure I've seen a datapoint or two suggesting this threshold exists)
<9%
<5% (this one is still in question as well)
Those are for credit cards. Installment loans have far less, just <9% and under 69% I believe. @Anonymous knows more.
^^^^ @OmarGB9 correct those are for credit cards, and the 5% is maybe the most proven one. For loans, it's 10% and 65%, I believe, although there are some other small ones like 87 or 88%.
@Anonymous For the loans on the 10% & 65% I assume that is aggregate and not individual?

I just had an installment loan go paid in full and then closed so my Loan utilization went from 63% to 74% which made me lose up to 6 points accross my mortgage scores. I had 4 opened loans and now I'm down to 3 open which is why my Utilization went up. Sounds like to recapture those points would be to bring the Loan util down to 65%?

@TravelNut likely but you also have one less account with a balance.

Re: Installment Loan Threshold

Revelate — Fri, 30 Apr 2021 14:00:33 GMT

@SouthJamaica wrote:
@805orbust wrote:
@SouthJamaica I was following that thread a few years ago when you started it... Didn't realize you had that reason code show up as far down as 14%. I remember the impact as you passed thresholds. You only saw a few points gain as you passed them?

I don't know why I remember the gains being larger. May have just been excitement as I purchased a car at the same time and seeing what you were doing literally made me toss extra money at it and knock it out early. 😆
The score increases, when they did occur, were so slight that it was never clear if they were attributable to the loan balance decreases or not. I don't think I was subscribed to experian.com at the time, so I didn't have access to daily movements.

I remember feeling quite deflated when I'd gotten it down to 14% and was still getting the negative reason code.

I had misinterpreted the "reindeer games" theory pioneered by @Revelate

Grin.

I tested down to something like 68% aggregate recently and got nothing but I still stand by my original datapoint that there is a breakpoint maybe around the 65/66% threshold that Birdman mentioned. I haven't seen anything discounting my original findings but I was also moving in big jumps (and admittedly haven't been around that much in the last year or two, people keep me honest .

Like SJ suggests though the reason code doesn't disappear until 9%... and in my old data on a dirty scoreard 2/3 of the aggregate points gained where at that that point. Think 10 points for high breakpoint, 20 for 9% on a cleanish scorecard would be reasonable estimates.

I unfortunately couldn't get further, I'd really like someone that is tracking hard with AOYRA > 1 year to just walk a single loan across all the metrics starting from 99% and going down 5% each time while staying clean, even 10% jumps would be good. Hell small loan I'll paypal them the interest as I know that's kind of a big ask.... but unfortunately mortgage loans factor into these and as a result it's hard for me to make a real dent in them and it's just fiscally stupid for me to throw large amounts of cash (if I even had that much laying around) at a 3.25% or better debt.

Worse I may just do short term rental and then get my LA Condo sold and get back to Raleigh and go shopping since it seems pretty clear I'm going to wind up sticking there for a while... yeah, that didn't exactly work out in Houston but rent blah, and worst case I just find something in a rentable area and figure it'll just be another real estate empire (admittedly a small one) addition.

Re: Installment Loan Threshold

Anonymous — Mon, 24 May 2021 17:48:24 GMT

I have a DP for a potential 75% threshold for Aggregate Loan Utilization. I saw a 3 point gain on all EX FICO 8 models (normal, auto, and bankcard). The score change happened during the middle of this month, so no changes in relation to age of accounts. The only change on my report is loan balance went from $47,036 --> $46,679. Original loan amounts totalled $61,915. So 75.97% utilization to 75.39% utilization. It could possibly be tied to installment balance, but $47k seems like a very odd threshold for balance.

Not sure if anyone has any other DPs to support 75% as a utilization threshold for installments?

I am in a clean, thick, mature, new revolver scorecard.

Re: Installment Loan Threshold

Anonymous — Mon, 24 May 2021 18:05:44 GMT

@Revelate wrote:
@SouthJamaica wrote:
@805orbust wrote:
@SouthJamaica I was following that thread a few years ago when you started it... Didn't realize you had that reason code show up as far down as 14%. I remember the impact as you passed thresholds. You only saw a few points gain as you passed them?

I don't know why I remember the gains being larger. May have just been excitement as I purchased a car at the same time and seeing what you were doing literally made me toss extra money at it and knock it out early. 😆
The score increases, when they did occur, were so slight that it was never clear if they were attributable to the loan balance decreases or not. I don't think I was subscribed to experian.com at the time, so I didn't have access to daily movements.

I remember feeling quite deflated when I'd gotten it down to 14% and was still getting the negative reason code.

I had misinterpreted the "reindeer games" theory pioneered by @Revelate
Grin.

I tested down to something like 68% aggregate recently and got nothing but I still stand by my original datapoint that there is a breakpoint maybe around the 65/66% threshold that Birdman mentioned. I haven't seen anything discounting my original findings but I was also moving in big jumps (and admittedly haven't been around that much in the last year or two, people keep me honest .

Like SJ suggests though the reason code doesn't disappear until 9%... and in my old data on a dirty scoreard 2/3 of the aggregate points gained where at that that point. Think 10 points for high breakpoint, 20 for 9% on a cleanish scorecard would be reasonable estimates.

I unfortunately couldn't get further, I'd really like someone that is tracking hard with AOYRA > 1 year to just walk a single loan across all the metrics starting from 99% and going down 5% each time while staying clean, even 10% jumps would be good. Hell small loan I'll paypal them the interest as I know that's kind of a big ask.... but unfortunately mortgage loans factor into these and as a result it's hard for me to make a real dent in them and it's just fiscally stupid for me to throw large amounts of cash (if I even had that much laying around) at a 3.25% or better debt.

Worse I may just do short term rental and then get my LA Condo sold and get back to Raleigh and go shopping since it seems pretty clear I'm going to wind up sticking there for a while... yeah, that didn't exactly work out in Houston but rent blah, and worst case I just find something in a rentable area and figure it'll just be another real estate empire (admittedly a small one) addition.

@Revelate Hey, actually @Remedios is doing exactly that walking it down 2% at a time with a loan, found a small breakpoint at 87 or 88%, which I believe one other person also confirmed. So hopefully she will have some wonderful data to add to yours and confirm yours.

Unfortunately life has been hectic for me the past several months so I haven't been able to keep track of everything as tightly as I normally do.

Re: Installment Loan Threshold

Anonymous — Mon, 24 May 2021 18:08:43 GMT

@Anonymous wrote:
I have a DP for a potential 75% threshold for Aggregate Loan Utilization. I saw a 3 point gain on all EX FICO 8 models (normal, auto, and bankcard). The score change happened during the middle of this month, so no changes in relation to age of accounts. The only change on my report is loan balance went from $47,036 --> $46,679. Original loan amounts totalled $61,915. So 75.97% utilization to 75.39% utilization. It could possibly be tied to installment balance, but $47k seems like a very odd threshold for balance.

Not sure if anyone has any other DPs to support 75% as a utilization threshold for installments?

I am in a clean, thick, mature, new revolver scorecard.

@Anonymous thank you for the data point. I don't recall anyone else mentioning that threshold, but we will be on the lookout and hopefully we may receive some other reports from other members contributing DPs. And It always starts with the first reported DP! Please continue to report any finds, thank you!