@MrFiah wrote:I'll add my DP's. I was able to get an auto loan right after I became FICO scoreable so I mean extremely young and thin ( 2 revolvers is all). My score dropped 30 points on Experian 8. It did take about 2-3 weeks to show up though.
Update 1/8/23: There have been no changes. So I guess that was it. Adding a brand new car loan with nothing paid down added 24 points to the EX FICO Auto 8 score of this fairly young, fairly thin, revolvers-only, file, and had no effect at all on its EX FICO 8 or FICO 2 scores.
My guess as to what it all means is that in FICO 8 and FICO 2 the addition of the debt burden was counterbalanced by the improvement in credit mix and removal of the no open loan penalty, suggesting that they were of equal value, while in the industry specific Auto 8 scores, actually having an auto loan, where none was present, open or closed, before, tipped the scales.
@Thomas_Thumb wrote:Another good data point showing effect of adding a non mortgage installment loan on a revolving only profile. A loan, where none existed before, may be worth 35 points (or so). I this case the "bonus points" are offset by the high B/L ratio on the installment loan. Although the mortgage Ficos like seeing a loan on file for mix, they don't seem to care if it is open or closed. Perhaps this helps explain the typical score drop on Fico 8 when closing a single open loan but minimal change on mortgage Ficos when a single open loan is closed.
One question: Did this profile have a new account under 12 months age at the time the auto loan was added? If yes, then the new account penalty should already be in place. If no, then I would have expected a point drop on Fico 8.
Side note: Industry option Ficos have an overlay scorecard worth +/- 50 points. We do know from reason codes that Auto Fico looks for presence of an Auto loan in its scoring algorithm. Your data point provides some quantification. My guess is a auto loan might be worth 20 points toward the Fico 8 Auto overlay but none toward the Fico Bankcard overlay. I don't think the overlay cares about open/closed status.
No there was no other account open less than 12 months, so this one would have been assessed the new account penalty. I too was expecting a FICO 8 point drop.
@Thomas_Thumb wrote:
Thanks -
I can't recall if Birdman's long thread on Fico scoring zeroed in on the new account penalty being specific to addition of a revolving account - installment account exclusion?
The new account penalty is typically 20 to 30 points (probably on the higher side for a thin/young file). A new inquiry typically costs 5 points.
Your data supports the idea that installment loans aren't considered in the new account penalty.
I believe it is. When I used to add Alliant SSL's they were referenced as new accounts. And in experian.com for the thin file I'm monitoring, in the FICO scoring factors it's referencing the fact that the newest account is 1 month old. The only account fitting that description is the auto loan.
Just because the score didn't move doesn't mean it wasn't factored into the net score.
Here there were positives: credit mix, open loan
And negatives: high installment utilization, new account
I think they just balanced each other out.
Update 1/12/23
When the inquiries hit a month later (multiple inquiries aggregated as one) EX FICO 8 and Auto 8 each dropped 3 points. So the net result in those scores was FICO 8 -3, Auto 8 +21.