I recently installed an autoloan and my Fico8 score dropped dramatically by 45! This drop should have two components: adding a new account and having loan balance (I excluded the HP impacts because they got monitored before installing the loan). I do not keep balance on credit cards and I prefer to maximize the Fico8 score. No negative.
I could not find any simulator to describe each component (e.g. Experina). Can somebody help to estimate my Fico score after e.g. 3-4 months of loan payment (the loan is for 5 years)? How long should I wait to heal the Fico8 score to be <10 point away from my initial score? Shall I consider paying down some parts of the autoloan to reduce its balance, if I potentially need a high Fico8 score urgently?
Fico8: EX~EQ~TU~810 (12 month goal~840).
~2-3 cards report very low balances every month.
Has the loan been paid down at all? How much of the loan amount is still owed? Similar to revolving utilization, you will be penalized for high loan balances. To maximize, you would pay down to under 10%. But once completely paid, you will lose points if you have no other installments.
That's my understanding. Hope others will correct or offer better specifics.
Adding a new account seems to result ~20 point drop in Fico8 score (I opened a new credit card some months ago and I tracked the score drop; experimental data and not a simulation). I assume that there should be no difference between opening a new account as credit card, loan or mortage, to check the impact of new account. The rest of 25 point drop because of the new loan account should be due to the high loan balance after the first payment (>90% utilization).
I expect the impact of new account would get mitigated partially within ~5-6 monts and its impact would get healed completely after a year (~20 point recvery). Recovering the rest of the 25 points would require reducing the loan percentrage ultilization.
I believe the new account penalty is more nuanced than that. My understanding is that you would get penalized for the first new account which causes a scorecard reassignment. Subsequent new accounts add lesser penalty because you are already on the new account scorecard, until your youngest ages past 12 mo. You will acquire penalty for the inquiry and if the subsequent acct causes your average age to drop past a threshold. It would also depend on other factors, as aged and thick profiles are less impacted by changes.
edit: I'm probably a little wrong on this. See this thread by Birdman7 for much better info on how youngest account impacts score:
General Scoring Primer and Version 8 Master Thread, pub.5.17.20