@iced wrote:Thanks to those who replied.
It seems the consensus at this point is it's probably the old late payments. I'll just have to ride things out for 3 more years (goodwill attempts have borne no fruit). Thankfully, it's not impacting my ability to get approvals, just my ability to get approvals with the best interest rates.
I'll also do some more reading up on the impact of installment loan utilization. I had always thought it had a very little impact, and I must admit I'm a bit concerned about this revelation. I am planning to sell off the house the mortgage is on later this year without taking on a new mortgage right after, so I will have an opportunity to reduce the utilization percent and observe how my score changes then.
Installment loan utilization has a huge effect. In my profile it provides swings of over 30 points.
I don't want to be a party pooper, but if you sell the house, close out the mortgage, and don't reduce the student and car loans, I predict that you still won't see a pop in your score, because you'd still have a high percentage of your then reduced installment loan debt out there, so the utilization percentage will not have dropped. FICO (stupidly in my opinion) doesn't seem to care about the size of the installment loans, it only seems to care about the percentage outstanding.
On the other hand, if you can come out of the house sale with enough money to bring the student and car loan balances down to a total less than $6000, then you'll probably see a large score increase once everything has reported.
I know it's intuitive to think that paying off a big loan like that would score points for you with FICO, but it doesn't.
@iced wrote:SouthJamaica,
My plan is to pay down/off the student loan with some of the equity realized.
Unfortunately, if I pay off the student loan, my utilization (as you point out) doesn't really move because I would still have around a 94% utilization (~$29k balance on a $31k car loan), whereas if I merely pay down the loan but not completely I could reduce it to 60% or more ($10k balance on a $35k student loan + $29k on $31k car loan).
I could also make large payments against both but the interest rate on the student loan is 4.75% versus 1.5% on the car loan, so that makes for a poor allocation of funds IMO.
Basically, when it comes to installment utilization, I can either strategize my funding to boost my credit score or enhance my savings, but not both.
Well, installment loan utilization -- unlike credit card utilization -- only counts the overall utilization, not the per-account utilization. So, for FICO score purposes, the trick is to pay the student loan down to a small number but not to zero, so that the face amount of the loan will still be in the game. If you pay the student loan down to $1k, and the auto loan were at $29k, you'd have installment loan utilization of 45%, which would probably get you some points.
Yes it's true that often one has to prioritize economics vs. FICO score. Many times something that saves you bucks costs you points. Classic example: someone who's carrying balances of $5k paying 15% iinterest gets Slate card with $5k credit limit and 0% interest and zero-fee balance transfer offer. Economically it's a no brainer to take the balance transfer for the whole thing, but FICO scores take a hit because of the 100% utilization on the Slate card.
It's just a matter of priorities.