@Anonymous wrote:
That wouldn't explain it.....
It could.
There are different thresholds to be crossed for installment loans. Some believe 70% or 80% to be the first major one that could result in a reason code of "installment loans significantly paid down." My mortgage and auto loan are paid down to a utilization of about 72% right now. I've seen this reason code since my installment loan utilization was at about 75% maybe 6 months ago. There are some months where I see this reason code on just 1 bureau and other months where it's on 2 bureaus.
However, it's pretty clear that having 70%-80% utilization on your installment loans is still a significant balance [relative to where they began] so it wouldn't surprise me if that amount could also be considered a negative. I think this would especially be true in the case of a mortgage where someone still has some 20+ years of paying that loan; 20 years of time represents a significant amount of risk over say a 5 year auto loan.
Look at it this way, say there's 3 break points for installment loans. 80%, 50% and 10%. I don't know this to be the case, but am just throwing out numbers there for the sake of this discussion. Once someone hits that 10% mark, they are achieving the maximum FICO points possible (around 30) for having that loan verses if there were no installment loans on their report. We can deduce that 50% would be a portion less of those 30 points and that the 80% would be even a smaller portion of those 30 points. So, say you're at 60% utilization. This could be viewed as a positive relative to your original balance with respect to FICO scoring as your score will be better now than when you opened the loan. However, it could be negative at the same time as until you reach that < 10% loan balance you aren't realizing the maximum scoring benefit from that installment loan.
Out of curiosity, what is your installment loan utilization now and what was it 6 months ago?
