Another AZEO question?

[Anonymous]

Nevermind, I didn't read post #14 carefully Rev, sorry. OK, now I get it, I think. FICO 8 is revolvers only. Anything prior is accounts? Correct?

[Anonymous]

As far as I know the installment loan isn't factored or not factored as much into accounts reporting balances .
When seeing azeo I would imagine if one has 2 or 3 installment loans reporting, and 3 cc with only one reporting u will still see a score improvement from all cc azeo.
As for installment loan(s) they seem to factor less...when it comes to more than one reporting. When I had 2 installment loans my score seemed to stay the same
You should just think of it as two separate factors. Cc and loans.
Since there's not much one can do if can't pay down installment loan, then one should just worry about cc azeo.
Of course we know if u have zero loans ur score will go down. So I don't believe if u have more installment loans than 1 than u could compensate with more or less credit cards. Imho it wouldn't make a difference. I've had up to 5 of my 7 open accounts report a balance( including 2 installment loans) and saw minimal change in my FICO 8 score.
But mortgage was different .Ymmv

[Anonymous]

My mortgage score benefits the most when I use azeo method for sure. Maybe as much as 15-20 points when I let more than 1 cc report.

[Anonymous]

Yes, the main point and biggest benefit of AZEO is for mortgage scores indeed. And yes, the extra CCs do optimize the installment loans, but that is limited to the older mortgage models, if I understand correctly. FICO 8 considers only revolvers in the calculation whereas the earlier models also consider loans.

[Anonymous]

Sound right

[Revelate]

That’s the current knowledge at least Birdman re: FICO 8.

My ratios were always the same regardless of how many revolvers or installment loans I had.

I am planning to retest EX FICO 2 once my auto loan is paid, and given I was planning to try revolvers all balances anyway will see if I can pick up a change on that too to confirm EX FICO 8 as well.

[MakingProgress]

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@Yeliaba1 wrote:

@dtk6802 thank you.  My real question is if you say you are using the AZEO method is your installment loan below 8.9??I’m more curious about how people are communicating they are using this method; with 1 reporting revolver below 8.9% and any installment loan or an installment loan reporting below 8.9%?  

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Installment loans have NOTHING to do with AZEO.  AZEO has everything to do with your revolving accounts.

You do get a socre boost from having an installment loan below 8.9%, but it is not necessary for AZEO.

[Anonymous]

Hi guys.  I wouldn't be so certain that installment accounts (e.g. loans) have no impact on the scoring factor "Number of accounts reporting a balance."  And that's for a few reasons.

(1)  Just in terms of the relevant negative reason statements themselves (generated by the FICO algorithm) there is no language that suggests that FICO 8 (or any other model) counts only revolving accounts.  The language simply says "accounts."  FICO is usually pretty good about calling out when it is thinking only about revolving accounts (or only installment).  In fact some of its language is so detailed that it sometimes is as specific as "non-mortgage installment" (for example).  So if it uses the generic language "accounts" that suggests it may simply be considering accounts -- not revolving accounts only.

(2)  Some of the language produced (officially) by FICO itself here on its Credit Education page also uses the generic phrase "how many accounts have balances."  In contrast, the same page specifically calls out sub-types like revolving or installment when that is its intention.

(3)  There was at least one case study here on the forum where a person claimed that he went from AZEO to 100% of revolving with no effect, but when I probed I discovered that he had exactly three credit cards (no other revolving) and something like nine open loans.  If loans are considered as "accounts with a balance" then that result is easy to explain (10/12 to 12/12).  Otherwise the fact that he saw no impact is harder to explain.

I am myself agnostic on this issue and would be delighted to see a few (repeatable) tests done to answer it.  It shouldn't be hard to find on the forums a few people with a huge number of open loans and three cards.  We could then compare that with someone with no open loans or exactly one.