Effect on FICO score with new installment loan.

[Shadowfactor]

A while back I asked about the effect on a new auto loan would have on my credit. Here are some data points. 

UPDATED with TU and EQ

Net Loss for new installment loan

EX : 6 points

TU : No change

EQ: 4 points

These are data points to help the community. If I’m forgetting anything please let me know and I will add it.
I will try to add the score scores for Experian tomorrow for other FICO flavors.

Experian:
Before Auto loan reporting.

FICO 8 : 750
AAOA : 2.8 years
AoOA: 9.3 years (closed)
AOYA : 2 months (credit card)
14 new accounts within 2 years.
12 new accounts under a year
No Collections.
2 installment loans both closed in 2009-2010 :1 student loan & 1 auto loan.

FICO negative reason codes:
Credit History to short
No recent installment lloan activity

Experian :
After Auto loan Reported
FICO 8 : 744
AAoA : 2.2 years
AOYA : 1 month
AoOA: 9.3 years
No collections
2 closed installment loans (listed above)
1 open Auto loan (co-signed )( 1 month old )
Reporting 20485 as current balance on 21010 loan amount. (97% Util)

FICO negative reason codes:
Credit History too short
Installment loan balance to high

TransUnion:
Before Auto loan reporting.

FICO 8 : 685
AAOA : 2.5 years
AoOA: 9.3 years (closed)
AOYA : 2 months (credit card)
14 new accounts within 2 years.
12 new accounts under a year
One Collection 

Time Since Negative 2.7 years ( DOFD is really 2014 so the calculation is off)
2 installment loans both closed in 2009-2010 :1 student loan & 1 auto loan.

FICO negative reason codes:
Credit History to short
No recent installment lloan activity

Transunion :
After Auto loan Reported
FICO 8 : 685 ( No change)
AAoA : 2.2 years
AOYA : 1 month
AoOA: 9.3 years (closed)
One collection

Time Since Negative 2.7 years ( DOFD is really 2014 so the calculation is off)
2 closed installment loans (listed above)
1 open Auto loan (co-signed )( 1 month old )
Reporting 20485 as current balance on 21010 loan amount. (97% Util)

Equifax:
Before Auto loan reporting.

FICO 8 : 699
AAOA : 2.5 years
AoOA: 9.3 years (closed)
AOYA : 2 months (credit card)
14 new accounts within 2 years.
12 new accounts under a year
One Collection 

Time Since Negative: 4 Years 2 Months
2 installment loans both closed in 2009-2010 :1 student loan & 1 auto loan.

FICO negative reason codes:
Credit History to short
No recent installment lloan activity

Equifax :
After Auto loan Reported
FICO 8 : 695
AAoA : 2.3 years
AOYA : 1 month
AoOA: 9.3 years (closed)
One collection

Time Since Negative: 4.2 Years
2 closed installment loans (listed above)
1 open Auto loan (co-signed )( 1 month old )
Reporting 20485 as current balance on 21010 loan amount. (97% Util)

I'll post some pictures of my 3B when I get home and can santize them

[Anonymous]

If I am reading your results right, they suggest that FICO 8 gives a person no "credit mix" benefit whatsoever by going from zero open loans to one open loan -- if the person already has a closed loan on file.

The scoring benefit comes from bringing one's installment utilization from 100% down to a much lower percent. (A factor not in Credit Mix but in the Amounts Owed category.)

It would be interesting to see some repeated case studies where a person goes from zero loans of any kind (closed or open) to exactly one loan (at 100% IU).  That would further isolate the credit mix effect. 

[Shadowfactor]

For Experian:

6 point loss for a nearly maxed out auto loan isn’t bad. I’m hoping once the loan reaches lower Util thresholds I will see a score bump.

It will be interesting to see the results for TU and EQ as those are on dirty scorecards with a collection reporting.

EQ reported this morning but I have to wait until TU updates before I do my 3B pull.

Good timing though as all my statements cut the 1st-3rd of the month or the 26th-28th. All the credit cards have reported and I’ve seen the score changes for those monthly updates already.

[Anonymous]

For me, AoYA here is the biggest factor.  The OP having opened 12 accounts in the last year and going into this with a AoYA of 2 months only lowered his AoYA very slightly.  Had his AoYA been > 12 months for example, his 6 point loss when adding the new loan could have easily been to the tune of 20-25 points.

[Shadowfactor]

Updated with 3B scores and changes

[Anonymous]

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@Anonymous wrote:

For me, AoYA here is the biggest factor.  The OP having opened 12 accounts in the last year and going into this with a AoYA of 2 months only lowered his AoYA very slightly.  Had his AoYA been > 12 months for example, his 6 point loss when adding the new loan could have easily been to the tune of 20-25 points.

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Agree 100%.  That's why this case study seems instructive.  His AoYA has remained stable (and very low).  Thus his failure to gain any scoring points for his open loan cannot be attributed to a gain in Credit Mix being cancelled by a loss from AoYA.  If our OP's results are valid, then they seem to imply that the Credit Mix benefit from a loan (in FICO 8) can be obtained from a closed loan just as much as an open one.  It is the Installment Util benefit that one gets from an open loan.

Question for our OP.... it looks to me as though you have collections in EQ and TU but not in EX.  Can you describe the difference in derogs between the three reports more fully?  Specifically, is your EX report completely derog-free?  (No lates or another derogs?)  For TU and EQ, is the collection the only derog?  (No lates?)  Is the collection paid or unpaid?  And is the collection for an amount > $101?

If EX is completely derog-free, this strengthens this case study, since it suggests that whether one is on a clean or dirty scorecard, one still gets no Credit Mix benefit (in FICO 8) from getting an open loan.

[Shadowfactor]

For EQ and TU.
They are the same collection.
It’s PRA for Capital One. Unpaid $670
DOFD : June 2014
Account opened date for collection
January 2016

The charge off is removed from all reports.
No late payments on any reports.

EX is a completely clean report. I was able to get the PRA account removed from EX but not TU/EQ

https://ibb.co/nvt06K
https://ibb.co/in7Gfe

[Smooth_J]

Let me add my 2 cents worth of data to the mix as well. Since I virtually cleared out all my credit card debt (except for one account), I have been over 700+ and the new loan and my mortgage were not reporting yet.

Base: EQ: 733, TU: 734, EX: 726

Here are the scores after the posting of the unsecured loan:

EQ: 733, TU: 734, EX: 723

So only EX went down by 3 points.

My mortgage is still posting to the CRAs, however so far only EQ took a hit of 1 point. Hopefully the rest do not go down as much, if any.

Current AAoA is 6 years, 0 months based on EX data, and I still have 2 active auto loans. I also have one 30D from 9/2016, so I hope that will not matter soon.

[Anonymous]

My comments in blue below.

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@Smooth_J wrote:

Let me add my 2 cents worth of data to the mix as well. Since I virtually cleared out all my credit card debt (except for one account), I have been over 700+ and the new loan and my mortgage were not reporting yet.

Base: EQ: 733, TU: 734, EX: 726

      No open loans of any kind at this point, right?  Or did you have two open auto loans already?

Here are the scores after the posting of the unsecured loan:

EQ: 733, TU: 734, EX: 723

      The mortgage was not yet reporting, right?  So at this point exactly one loan had appeared.  And you owed the full amount of the loan at this point?

So only EX went down by 3 points.

My mortgage is still posting to the CRAs, however so far only EQ took a hit of 1 point. Hopefully the rest do not go down as much, if any.

Current AAoA is 6 years, 0 months based on EX data, and I still have 2 active auto loans. I also have one 30D from 9/2016, so I hope that will not matter soon.

When did you take out the two auto loans? 

The reason to take out a loan for scoring purposes is because a person has no open loans.  If a person already has loans then the pre and post scores for one more loan will likely not mean much. 

Our OP is letting us know what's happened in his case because he's gone from no open loans to exactly one.

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[Thomas_Thumb]

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@Anonymous wrote:

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@Anonymous wrote:

For me, AoYA here is the biggest factor.  The OP having opened 12 accounts in the last year and going into this with a AoYA of 2 months only lowered his AoYA very slightly.  Had his AoYA been > 12 months for example, his 6 point loss when adding the new loan could have easily been to the tune of 20-25 points.

---

Agree 100%.  That's why this case study seems instructive.  His AoYA has remained stable (and very low).  Thus his failure to gain any scoring points for his open loan cannot be attributed to a gain in Credit Mix being cancelled by a loss from AoYA.  If our OP's results are valid, then they seem to imply that the Credit Mix benefit from a loan (in FICO 8) can be obtained from a closed loan just as much as an open one.  It is the Installment Util benefit that one gets from an open loan.

Question for our OP.... it looks to me as though you have collections in EQ and TU but not in EX.  Can you describe the difference in derogs between the three reports more fully?  Specifically, is your EX report completely derog-free?  (No lates or another derogs?)  For TU and EQ, is the collection the only derog?  (No lates?)  Is the collection paid or unpaid?  And is the collection for an amount > $101?

If EX is completely derog-free, this strengthens this case study, since it suggests that whether one is on a clean or dirty scorecard, one still gets no Credit Mix benefit (in FICO 8) from getting an open loan.

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^ Correct and this has been so stated by Fico - credit mix includes open and closed loans.