Gut Check on Score Impact of PL Strategy

[audioman00]

Hi All,

I have two PLs, both for the same amount ($25k). PL1 is 99% paid off and PL2 is 25% paid off. I'd like to refi PL2.

In order to maximize my score and secure the best rate for the refi, should I pay down PL1 in full first or should I let it stay open showing 1% utilization? 

Thanks!

[FlaDude]

As I understand it from Birdman7's scoring page (https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/General-Scoring-Primer-and-Version-8-Mas... ) aggregate installment loan utilization is a factor that would best be served by keeping PL1 open. You don't mention the relative loan amounts for PL1 and PL2, if PL1 was much smaller than PL2 it might not matter.

[audioman00]

Thanks @FlaDude! PL1 and PL2 were both $25k.

[SouthJamaica]

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@audioman00 wrote:

Hi All,

I have two PLs, both for the same amount ($25k). PL1 is 99% paid off and PL2 is 25% paid off. I'd like to refi PL2.

In order to maximize my score and secure the best rate for the refi, should I pay down PL1 in full first or should I let it stay open showing 1% utilization? 

Thanks!

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Unfortunately it won't make much of a difference early in the game.  But to the extent that it does, you're better off keeping PL1 open as long as you can, without missing a due date or something.

[Anonymous]

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@SouthJamaica wrote:

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@audioman00 wrote:

Hi All,

I have two PLs, both for the same amount ($25k). PL1 is 99% paid off and PL2 is 25% paid off. I'd like to refi PL2.

In order to maximize my score and secure the best rate for the refi, should I pay down PL1 in full first or should I let it stay open showing 1% utilization? 

Thanks!

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Unfortunately it won't make much of a difference early in the game.  But to the extent that it does, you're better off keeping PL1 open as long as you can, without missing a due date or something.

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@FlaDude Is correct. Leave it open. With it open your aggregate installment utilization is around 37.5% under the first significant threshold. If you were to close it, that would jump to 75% and you would lose points on version 8 and 9 anyway. Won't make a great difference on the mortgage scores.