I have a question about FICO scores. About eight years ago I filed for bankruptcy; two years later (over six years ago) I had a late payment (60 days) for $401 for a tuition loan, primarily because I didn’t know they would report it (my fault). Both of these items are still on my credit report. When I filed for bankruptcy most of my debt was student loan debt in the tune of over $50,000. I also had medical bills and some credit card debt, which got wiped out and has long been off my credit reports. When I graduated college (three years ago), I started paying back those student loans and quickly pulled my two FICO scores (TU 707 and EQ 714); the only adverse items at this time were the Bankruptcy and the late payment. On the report it said that I had the bankruptcy, I had too much debt (poor utilization ratio), and I didn’t have any mortgages or revolving accounts. I figured “no problem, I will just pay off my student loans and that will improve my scores.” I have checked my FICO scores intermittently since then and my scores are as follows: (TU 711 and EQ 714). I don’t get it, is there a maximum FICO limit for people with public records? Every few months I check my scores and nothing, my EQ score is stuck at 714 and my TU score has increased a mere four points. During this time I have paid all my student loan debt, my account ages and credit history have increased, and the time my bankruptcy and late payment have increased. Nothing else on the credit reports has changed: no new accounts, no inquiries, no late payments, no accounts have dropped out, nothing…. Does this mean that I represent the same credit risk today than I did three years ago? I find that hard to believe. If I was a lender I would trust the guy with no debt over the guy with over $50,000 of student load debt. Right? According to my credit scores, that is not the case.
BKs can really do a number on your FICO, even through the very end (7 or 10 yrs depending on the BK). I can only recall a small few posters in here who hit 750 and beyond with a BK reporting. I think the highest I've ever seen was 775, but that poster had decades of history despite the BK.
Installment utilization is a tiny part of FICO scoring. You really don't gain points by paying off loans, just like you don't get heavily dinged when adding a 6-figure mortgage.