topic Re: Is this true about "Installments"? in General Credit Topics

Is this true about "Installments"?

memevertical — Sun, 15 Aug 2010 14:59:14 GMT

A few months ago, I told a friend that I wanted to buy a house in about 12 months, so he told me how was my score, and I told him I only had 3 CC's, and that the score was around 680. He told me that even if the score is nice, 3 CC's dont show much Credit Experience, so he told me to get a car, and finance it off course.

So my 2 questions:

1.- Does an installment Account really boosts your credit score?

2.- Does it really makes you look good in front of a home loan company?

Thanks !!!!

Re: Is this true about "Installments"?

Anonymous — Sun, 15 Aug 2010 15:59:19 GMT

Having an installment loan will help. FICO likes to see a mix of different types of credit. Credit mix is 10% of your score.

You may see an initial drop due to new credit but, it should rebound quickly.

It is not a good idea to get anything new when trying to get a mortgage.

Re: Is this true about "Installments"?

Anonymous — Sun, 15 Aug 2010 16:30:45 GMT

To add to what guiness has said I don't think you should ever go into debt just to try and gain a few points on a score. Your main goal should be to get out of debt.

IMO with those three cards you can do just fine. Always pay on time, keep the utilization low, and let all the accounts age.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

Re: Is this true about "Installments"?

memevertical — Sun, 15 Aug 2010 17:20:21 GMT

Well, I've had the car loan for 3 months now, and I will apply for a home loan in about 6 months, so, you think it will hurt my chances on the home loan? will it help? Or it just depends on the opinion of the lender?

Obviously i have and will keep on doing on time payments.

Re: Is this true about "Installments"?

Anonymous — Sun, 15 Aug 2010 18:36:37 GMT

@memevertical wrote:
Well, I've had the car loan for 3 months now, and I will apply for a home loan in about 6 months, so, you think it will hurt my chances on the home loan? will it help? Or it just depends on the opinion of the lender?

Obviously i have and will keep on doing on time payments.

By the time you apply it probably won't matter but only the lender can say for sure.

Good luck with the mortgage application.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

Re: Is this true about "Installments"?

creditchild — Sun, 15 Aug 2010 18:37:03 GMT

when the car hit your credit report,did your score drop,and if so how much?

Re: Is this true about "Installments"?

memevertical — Sun, 15 Aug 2010 19:25:06 GMT

I dont remember exactly what was my score back then, but the problem is that the car loan people are only reporting to Equifax, and I dont have access to my real Equifax score, but I would say it dropped between 10 and 15 points.

Re: Is this true about "Installments"?

Anonymous — Sun, 15 Aug 2010 19:53:47 GMT

can get it here thru myfico, google the discount codes. '04 version which most lenders are using...

Re: Is this true about "Installments"?

memevertical — Sun, 15 Aug 2010 20:05:59 GMT

Hey daboss28, thanks for the help. What do you mean by "'04 version which most lenders are using"?

Re: Is this true about "Installments"?

Anonymous — Sun, 15 Aug 2010 21:21:53 GMT

The fico scoring methods have change every four-six years or so for the past 10-12 years. There were '98 versions which myfico uses for TU. There are the 2004 versions which myfico uses for EQ. The '04 versions of the scoring methods have the lion share of the market. There are also the '08 versions which are starting to catch on. Don't know which lenders are currently using those. So chances are the Eq score here is the same version/score your potential lender will pull. Not 100% becuase I don't know which lenders are currently going with '08.

Re: Is this true about "Installments"?

haulingthescoreup — Tue, 17 Aug 2010 11:44:26 GMT

The Equifax score used here is the Beacon 5.0 Classic, which is the one still used by the mortgage industry and most others who pull FICO's.

It's the TU score provided here (and by TU) which is ancient. (C'mon, TU, get with the program!)

However, auto lenders frequently pull a modified FiCO score called an industry-enhanced score, for auto loans in this case, which aims to better predict credit risk for loans. It's still a FICO (as opposed to a FAKO), but it doesn't match your EQ FICO/ Beacon 5.0.

There is a newer version of all three FICO scores called FICO 08, but it's just barely beginning to penetrate the lending industry. Lenders are slow to change, especially after the last 2 years we've all gone through.