Installments loans and credit untilization rate

[Anonymous]

So I just purchased something for around 5,000. It is on a 4 year installment plan. That 5,000 doesn't count towards my utilization rate does it? I saw it pop up on my credit like it did, and since my limits are only around 12k that would really be bad if they were tacking on 5k to the balance every time it reported. It isn't like it is a line of credit it is an installment loan so I don't see why it would count but just checking to be sure.

[Anonymous]

I think utlization is only for revolving account. Because if they put it in Installment loan (e.g. car/house) then that will be really bad my 2 cents!

[RobertEG]

Percent uitlization only applies to your usage of your revolving lines of credit.

Installment loans have their own effect on utilization of credit by use of the ratio of upaid balance / orig loan amount.

However, the weighting of installment utilization is MUCH lower than your percent util of revolving.

It is not a major scoriing factor.

[RonM21]

Well stated. The installments are different from revolving in how they factor in. You'll have a higher ratio on your installment numbers, but utilization for credit is not effected.

[takeshi74]

Utilization generally refers to Revolving Utilization which only considers revolving accounts.  Installments have something similar, balance to loan ratio but that doesn't have as significant an impact as Revolving Utilization.  Don't conflate the two.

[Anonymous]

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@Anonymous wrote:

So I just purchased something for around 5,000. It is on a 4 year installment plan. That 5,000 doesn't count towards my utilization rate does it? I saw it pop up on my credit like it did, and since my limits are only around 12k that would really be bad if they were tacking on 5k to the balance every time it reported. It isn't like it is a line of credit it is an installment loan so I don't see why it would count but just checking to be sure.

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As previous posters have stated installment loans are not included in you revolving credit utilization but are rather scored in a separate category here is a thread that discusses this at length. http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Installment-tradeline-utilization-thread/m-p/4650970#M111140