@Anonymous wrote:Hi Dave! A few quick thoughts:
(1) Part of your concern is purely practical. That is, you want to make sure that you are getting the full scoring benefit for your TU score (since you have no open installment loan on the TU report).
Happily that is easy to solve. Just take out a Share Secure loan with Alliant, pay almost all of it off, and keep it open for five years. The first three posts in this thread will tell you all you need to know about that:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756
(2) You may be under the impression that you get no scoring benefit unless your installment utilization is < 9%. This is not so. You almost certainly get some benefit far earlier than that.
Furthermore, contributor Thomas Thumb speculates that the thresholds for benefit may be quite a bit higher if a person has been making payments on a loan in good standing for a while. What constitutes a "while" is uncertain, but I think TT doubts it is longer than 24 months.
(3) Remember that there isn't a single way that FICO handles installment utilization (how much of one's open debt has been paid off). FICO 8 cares about that. The mortgage model for TU and EQ (FICO 04) does not care at all. The mortgage model for EX (FICO 98) cares but perhaps not as much as FICO 8. And I don't think we have much hard evidence for exactly how much FICO 9 cares, though I have been trying to get people on the SS loan thread to provide that.
Future FICO models may very well track and reward the successful management and gradual payoff of loans that are 24+ months in length. Certainly someone with a history of five such loans (say) on his report (but no open debt) deserves more scoring benefit than someone with no such history but who is exploiting the SS loan trick.
But until the models arrive that you'd like, the good news is that you can certainly take practicial steps to prevent yourself from being penalized by the successful payoff of your open debt. Just make sure you have implemented the SS loan technique and you will be set.
(4) You write: "I just do what's bestfor me financially, and while my FICO scores are important, I don't let that dictate my financial decisions." Good for you! Great way to think.
Not to pick a fight but speculation based on what? It certainly doesn't appear to be calculated differently than aggregate revolving utilization, I'm not really thrilled with the top breakpoint data in terms of nailing that down, but the pretty metric is certainly well characterized.
In general it's just analytics, and even the 20ish point swing I took when originally testing it, other than mortgages 700 vs 720 vs 740 is pretty irrelevant in today's market, and speaking of mortgages in particular, FICO 04 ignores installment utilization so end of the day I consider it mostly to be a non-issue.
Sure, I would like my FICO 8 scores to be 750 or even 760 now than the 740 or less they have been stuck at for the last several years, but in practical terms from my consumer perspective, it matters almost not at all. When the GSE's change their UW standards, I'll be right up there complainin' about it as well, by my "rational" view (yeah yeah I know 
) a mortgage shouldn't penalize me, but it did on FICO 8... but to be fair I gimmicked the algorithm with that installment utilization testing anyway heh, though that's really no different than paying before the statement cuts to report $0 on tradelines.
There is zero likelihood that thresholds for installment loan B/L above 9% do not exist. Poster reporting non trivial score increases when thresholds above 50% are crossed are not uncommon. Links to those posts have been provided in prior threads. Frankly, I have yet to see anyone report a score increase when an open mortgage with multi-year payments is part of aggregate B/L and the aggregate B/L crosses below 9%.
Pasted below is my thought on how payment history may come into play for Fico 8 non mortgage installment loans. The point changes are for representation only. The takeaway is rapid paydown of a loan is a shortcut to gaining points that may otherwise come from a prolonged payment history.
It is also clear that installment loans are differentiated by type as indicated by specific reason codes and on 3B reports where there is a mortgage accounts section separate from the installment accounts section. [I have a 15 year mortgage with 11 years payment history but NO installment category credit history due to not having any other type installment loans. Also of interest is balance on your NON-MORTGAGE credit accounts is too high. I pretty sure the 3rd and 4th reasons relate to my AMEX B/HB and my AU card.]
More than a few posters have reported 850 scores with open mortgages & aggregate B/L above 50%, myself included. This again supports the presence of higher thresholds.
Here is what I see based on MyFico posts and other sources of data:
1) The presence of an open mortgage influences scoring associated with crossing aggregate B/L thresholds.
2) Open loans with "long term" payment history impact points available relating to B/L thresholds. In other words, if someone had only one loan - say a 5 year Auto or SSL loan with 3 years payment history, paying outstanding B/L to below 9% would garner substantially fewer points than if the loan had 3 months payment history and were paid down to below 9%. Two years of payment history could be a milestone.
In the James Rickards book: THE ROAD TO RUIN, Rickards discusses using behavioral psychology, complexity theory and Bayesian statistics to formulate and refine hypothesis when limited data is available. The below quote speaks to how I like to evaluate Fico related information/data.
" Bayesian probability posits that certain events are path dependent. This means some future events are influenced by what precedes them.... Bayesian probability is solid science, not mere guesswork, because the prior hypothesis is tested by subsequent data This approach begins with a prior hypothesis formed inductively from a mixture of scarce data and common sense. Then new data is used to either confirm or to repute the hypothesis. The ratio of the two types of data is updated continually as new data arrive. Based on the updated ratios, the hypothesis is either discarded (and a new hypothesis formed) or accepted with greater confidence".
- James Rickards
The interaction of attributes on Fico score are more complex than readily apparent looking at data sets in a linear fashion and provide opportunities for casual inference.. See below example of casual inference.
- X can cause Y even if there is no “causal path” connecting X and Y.
Sometimes we think of causal chains of the form: A causes Z by causing B which in turn causes C which causes D and so on, where each pair of elements in the chain are connected to each other in time and space. You can gain confidence that A causes Z by seeing the effects on B, C, and D along the way. . . This way of thinking can however be very misleading. Consider an example given in [2]. Person A is planning some action Y; Person B sets out to stop them; person C intervenes and prevents person B from stopping person A. In this case Person A may complete their action, producing Y, without any knowledge that B and C even exist; in particular B and C need not be anywhere close to the action. Nevertheless, C caused Y since without C, Y would not have occurred. And this despite the fact that there is no “spatiotemporally continuous sequence of causal intermediates” between C and Y