Frustrated with my credit scores

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:

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For God's sake don't pay anything off. I made that mistake with my mortgage - paid it off 7 years early and lost 60 points on all 3 Bureaus the very next month. A year later and I paid off my car not 2 years early and lost another 40 on all 3. Want good credit? Pile the debt on and watch the FICO score soar. Paying the debts off is the kiss of death with FICO. After all, the algirithm rationalizes - if you stop paying (even if the reason is you don't owe anything) you will never again start paying.

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I think you're being a little dramatic here.  First of all, I'd gladly welcome a 60 point drop to my FICO scores across the board if it mean my mortage would be paid off tomorrow, 7 years early, or whatever.  Why?  Because significant debt would be gone.  And, as has been mentioned many times before, utilizing the SSL technique would give you all of those points back within 1-2 cycles.  Problem solved.  Piling on debt does not cause your FICO scores to soar. 

The only two work arounds to helping your score are to use the SSL technique and letting 1 small balance report on 1 card.  These two things combined hardly cost anything, take little time and effort, yet yield scores about 50 points higher than if you didn't do them.

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While I understand what you are saying, in practice it simply does not work that way. When I took oput the car loan (December 2015)  I took a 15 point hit for the new account. I got back 2-3 points a month as payments were made and the balance went down. All the points I got while making the payments were lost when I paid the debt off completely. Paid the loan off and took a 40 point hit. FICO exists to keep you in debt. Get out of Debt and you get thrown off the ride. That was my experience. $5 debt = good. $0 debt = bad.

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Also, something to consider that I just remembered.  The Auto scores and Mortgage scores are likely to put a different emphasis on your payment history of your Auto and Mortgage payments (and subsequent pay off).  I just looked at a 3B  report before I got the SSL and both my Auto scores and Mortgage scores are  much higher than my Fico 8 scores.  So those models apparently did not require "more debt".  Fico 8 just doesn't appear to give them the same weight from what I can see.  I'm by no means a fico guru - I'm just looking at my profile, and based on it - this may hold true for other profiles as well.

[Anonymous]

Great point, LOTR.  This is a point we make in the very first post of the Share Secure Loan thread.  But it can't be made often enough.

Specifically, the mortgage model used by EQ and TU (FICO 04) does not give you any benefit for having open installment debt that is mostly paid off.  This is contrast to FICO 8 which does give you a big benefit.  Curiously, the mortgage model used for EX behaves much more like FICO 8 in this regard. 

This means that if a person is preparing for a mortgage and has no open loans, he should look to see where the Experian mortgage score falls (highest, middle or lowest).  If EX is his highest score, there is no point to using the SSL technique, since it won't alter his middle mortgage score.  But if EX is not his highest, there might be a big advantage.  Here's one example of many:

Low EQ = 690

Mid EX = 718

High TU = 741

The SSL technique will raise his EX score and could well cause his TU score (741) to become his new middle score.  The difference between 718 and 741 could change his interest rate and his rate for PMI.

[Anonymous]

I broke down today and went to my local Credit Union. They are opening two savings accounts for me - one will be funded by them loaning me $1,000 for 18 months. I will immediately deposit the 18 months interest into the account and they will take the 18 payments out of the account automatically. The other will be funded $500 from my checkling account and they will give me a credit card with a $500 limit.

Did I mention that in addition to having both accounts 100% secured by funds in their possession, they want a co-signer? That is the epitome of bad credit - needing a  comaker for a debt 100% secured by cash.

[Aprile421]

I just got my mortgage 6 months ago. I had fully expected my scores to take a big dip. I was shocked when they increased a few points. In the 6 months I have had it every month when my mortgage payment posts I get about a 2 pt increase across the board.

[Anonymous]

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@Aprile421 wrote:

I just got my mortgage 6 months ago. I had fully expected my scores to take a big dip. I was shocked when they increased a few points. In the 6 months I have had it every month when my mortgage payment posts I get about a 2 pt increase across the board.

When I had my mortgage and car debts I also got 1-3 points a month, until I paid them off. Then all the points I got were quickly traken away. THAT is my frustration. You lose points if you don't pay and you lose points when you DO pay.

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[Anonymous]

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@Anonymous wrote:

I broke down today and went to my local Credit Union. They are opening two savings accounts for me - one will be funded by them loaning me $1,000 for 18 months. I will immediately deposit the 18 months interest into the account and they will take the 18 payments out of the account automatically. The other will be funded $500 from my checkling account and they will give me a credit card with a $500 limit.

Did I mention that in addition to having both accounts 100% secured by funds in their possession, they want a co-signer? That is the epitome of bad credit - needing a  comaker for a debt 100% secured by cash.

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I received 17-20 points across the board on Fico 8 when my SSL reported. It may have been even higher if not for all the new accounts added recently.  I hope you see nice increase in your scores.

Yeah, I know the downside of bad credit.  Though my starting scores indicate mid-600's, 8 months prior to those starting scores, they were more like mid-500's. Derogs are killers to a score.  

[Anonymous]

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@Anonymous wrote:

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While I understand what you are saying, in practice it simply does not work that way. When I took oput the car loan (December 2015)  I took a 15 point hit for the new account. I got back 2-3 points a month as payments were made and the balance went down. All the points I got while making the payments were lost when I paid the debt off completely. Paid the loan off and took a 40 point hit. FICO exists to keep you in debt. Get out of Debt and you get thrown off the ride. That was my experience. $5 debt = good. $0 debt = bad.

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Two things here. 

One, with your $5 "debt" and $0 debt.  $5 does not need to be "debt" it's a reported balance.  You do not have to pay interest on it.  It's not "real" debt.  So the FICO points you are getting with respect to optimal revolving utilization is obtained are done so without any debt at all. 

Two, there's an inconsistency somewhere in what you are saying regarding your car loan.  When you opened the car loan, did you already have an existing open installment loan or was it your only one?  Taking a 15 point hit for the new account is fine and all and usually those points will come back quickly; in my experience 4-6 months.  After that, assuming this was your only installment loan, your score should have continued to rise above what your starting point was.  By the time you got to very low utilization on the car loan just prior to paying it off, typically your score would be 25-30 points higher than your starting point.  Of course, that's all other things being equal and obviously over the course of the life of an auto loan the chances of all things remaining equal are slim to none as there are constant changes going on to everyone's credit profile.  If you had another installment loan present when you took out the car loan in 2015, you were already satisfying the "credit mix' sector of the pie with the first installment loan, so there would be no added benefit (only drawback) to adding another loan as it would increase your installment loan utilization in addition to the hit you took from the new account/inquiry/potential AAoA drop.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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While I understand what you are saying, in practice it simply does not work that way. When I took oput the car loan (December 2015)  I took a 15 point hit for the new account. I got back 2-3 points a month as payments were made and the balance went down. All the points I got while making the payments were lost when I paid the debt off completely. Paid the loan off and took a 40 point hit. FICO exists to keep you in debt. Get out of Debt and you get thrown off the ride. That was my experience. $5 debt = good. $0 debt = bad.

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Two things here. 

One, with your $5 "debt" and $0 debt.  $5 does not need to be "debt" it's a reported balance.  You do not have to pay interest on it.  It's not "real" debt.  So the FICO points you are getting with respect to optimal revolving utilization is obtained are done so without any debt at all. 

Two, there's an inconsistency somewhere in what you are saying regarding your car loan.  When you opened the car loan, did you already have an existing open installment loan or was it your only one?  Taking a 15 point hit for the new account is fine and all and usually those points will come back quickly; in my experience 4-6 months.  After that, assuming this was your only installment loan, your score should have continued to rise above what your starting point was.  By the time you got to very low utilization on the car loan just prior to paying it off, typically your score would be 25-30 points higher than your starting point.  Of course, that's all other things being equal and obviously over the course of the life of an auto loan the chances of all things remaining equal are slim to none as there are constant changes going on to everyone's credit profile.  If you had another installment loan present when you took out the car loan in 2015, you were already satisfying the "credit mix' sector of the pie with the first installment loan, so there would be no added benefit (only drawback) to adding another loan as it would increase your installment loan utilization in addition to the hit you took from the new account/inquiry/potential AAoA drop.

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When I took out the car loan in December 2015 I had the moretgage loan also. I paid off the morthahe loan in April 2016. I paid oiff the car loan in February 2017. The only changes to mt credit profile were the constantly decreasing balances on those two loans. Everything else was there for almost 7 years with monthly re-reporting of the same thing over and over again.

[Anonymous]

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@Anonymous wrote:

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When I had my mortgage and car debts I also got 1-3 points a month, until I paid them off. Then all the points I got were quickly traken away. THAT is my frustration. You lose points if you don't pay and you lose points when you DO pay.

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Again, if you employed the SSL technique, you wouldn't lose any points at all when you did paid off your car loan or mortgage.

[Anonymous]

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@Anonymous wrote:

I broke down today and went to my local Credit Union. They are opening two savings accounts for me - one will be funded by them loaning me $1,000 for 18 months. I will immediately deposit the 18 months interest into the account and they will take the 18 payments out of the account automatically. The other will be funded $500 from my checkling account and they will give me a credit card with a $500 limit.

Did I mention that in addition to having both accounts 100% secured by funds in their possession, they want a co-signer? That is the epitome of bad credit - needing a  comaker for a debt 100% secured by cash.

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I tried that with my local CU before I knew about Alliant. My credit score took a hit because of 100% utilization on an installment loan. I wouldn't have seen any real advantage to my credit score until about month 10 of 12. Whoopedy-doo! 2 months of benefit! I had to learn the hard way. Any advance payments I made to them just ended up shortening my loan length. I ended up paying the CU installment loan down to 8.99% and opening an Alliant SSL at the same time. Once I had that utilization in check, my scores shot up dramatically.