topic Re: How will new Auto Loan affect credit score in Understanding FICO® Scoring

How will new Auto Loan affect credit score

Anonymous — Thu, 21 Oct 2021 00:38:13 GMT

In the process of getting a new car for the family, and along with it a new shiny auto loan. Was approved through Cap1 for roughly 4-6% And DCU approved for 3.74% pending membership approval.

My question is, how will a new auto loan on my report affect my scores? The loan amount will be around 21k. Does this factor into utilization like a credit card? Ive never had an installment loan before so im not sure how it works. For some reason im expecting my scores to tank after the loan reports, I kinda have it in my head that its similar to a card with a 21k limit reporting at 21k utilization

Scores right now are ranging from mid 600s to low 700s.

Any advice or insight would be greatly appreciated, thanks in advance!

Re: How will new Auto Loan affect credit score

pizzadude — Thu, 21 Oct 2021 00:58:54 GMT

Do you have any installment loan history showing on your reports? If not then adding an auto loan will be a positive factor to your mix of credit. Inquiries and a lowered AAoA would be negative factors that will come with the new loan.

The overall impact to your score will depend on whether the positive here outweighs the negative factors.

Re: How will new Auto Loan affect credit score

sccredit — Thu, 21 Oct 2021 20:13:33 GMT

Every person's effect from a new account is different. I was expecting a pretty big drop (becasue that is what has happened every time I bought a new car in the past 15 years) after my new auto loan reported but instead saw a 3 point increase across the board.

Re: How will new Auto Loan affect credit score

Anonymous — Fri, 22 Oct 2021 05:47:27 GMT

I have a closed student loan from about 9 years ago that was only open for a few months, all paid as agreed. Does the utilization combine with card util. ? Or does installment utilization report seperately from credit card util. ?

@pizzadude wrote:
Do you have any installment loan history showing on your reports? If not then adding an auto loan will be a positive factor to your mix of credit. Inquiries and a lowered AAoA would be negative factors that will come with the new loan.

The overall impact to your score will depend on whether the positive here outweighs the negative factors.

Re: How will new Auto Loan affect credit score

SouthJamaica — Fri, 22 Oct 2021 12:51:36 GMT

@Anonymous wrote:
In the process of getting a new car for the family, and along with it a new shiny auto loan. Was approved through Cap1 for roughly 4-6% And DCU approved for 3.74% pending membership approval.

My question is, how will a new auto loan on my report affect my scores? The loan amount will be around 21k. Does this factor into utilization like a credit card? Ive never had an installment loan before so im not sure how it works. For some reason im expecting my scores to tank after the loan reports, I kinda have it in my head that its similar to a card with a 21k limit reporting at 21k utilization
Scores right now are ranging from mid 600s to low 700s.

Any advice or insight would be greatly appreciated, thanks in advance!

~~You will gain some points for improving "credit mix".~~ (OP later stated that he has a closed student loan.)

You will lose some points for inquiries, a new account, and having a high loan balance.

Probably the ~~net~~ result will be a point loss, which you will recover over time.

Re: How will new Auto Loan affect credit score

SouthJamaica — Fri, 22 Oct 2021 12:49:21 GMT

@Anonymous wrote:
I have a closed student loan from about 9 years ago that was only open for a few months, all paid as agreed. Does the utilization combine with card util. ? Or does installment utilization report seperately from credit card util. ?
@pizzadude wrote:
Do you have any installment loan history showing on your reports? If not then adding an auto loan will be a positive factor to your mix of credit. Inquiries and a lowered AAoA would be negative factors that will come with the new loan.

The overall impact to your score will depend on whether the positive here outweighs the negative factors.

Oh, in your original post you said you never had an installment loan before. A student loan is an installment loan. So you might not gain points for "credit mix".

Re: How will new Auto Loan affect credit score

Anonymous — Fri, 22 Oct 2021 18:46:21 GMT

@SouthJamaica wrote:
@Anonymous wrote:
I have a closed student loan from about 9 years ago that was only open for a few months, all paid as agreed. Does the utilization combine with card util. ? Or does installment utilization report seperately from credit card util. ?
@pizzadude wrote:
Do you have any installment loan history showing on your reports? If not then adding an auto loan will be a positive factor to your mix of credit. Inquiries and a lowered AAoA would be negative factors that will come with the new loan.

The overall impact to your score will depend on whether the positive here outweighs the negative factors.

Oh, in your original post you said you never had an installment loan before. A student loan is an installment loan. So you might not gain points for "credit mix".

Yeah, my mistake, it was from so long ago and only open for a few months that a forgot about it! Only stays on for 10 years right? So when it stops reporting in a year, the auto loan should carry on the benefit of the installment/credit mix ?

Re: How will new Auto Loan affect credit score

SouthJamaica — Sun, 24 Oct 2021 00:54:08 GMT

@Anonymous wrote:
@SouthJamaica wrote:
@Anonymous wrote:
I have a closed student loan from about 9 years ago that was only open for a few months, all paid as agreed. Does the utilization combine with card util. ? Or does installment utilization report seperately from credit card util. ?
@pizzadude wrote:
Do you have any installment loan history showing on your reports? If not then adding an auto loan will be a positive factor to your mix of credit. Inquiries and a lowered AAoA would be negative factors that will come with the new loan.

The overall impact to your score will depend on whether the positive here outweighs the negative factors.

Oh, in your original post you said you never had an installment loan before. A student loan is an installment loan. So you might not gain points for "credit mix".

Yeah, my mistake, it was from so long ago and only open for a few months that a forgot about it! Only stays on for 10 years right? So when it stops reporting in a year, the auto loan should carry on the benefit of the installment/credit mix ?

Yes.