Installment Loan Advice

[Anonymous]

Ive been studying up on inst. loans and how they effect credit. Correct me if wrong:
1. most possible points gained by having one (or all) installment loan/s open AND with <9% balance.
2. Next best would be having one open loan with 9 to 100% balance remaining.
3. Having no open loans (or closed) is a deduction and the worst of the 3.
Question time: is there any "ding" for having say an SSL with <9% and an auto loan with <9%?
I have an installment loan with a 2$ balance that must be paid off this month and Im wondering what my best options are for not losing the points. I am thinking about buying a newer car for my family but will not be able to pay it down to 9% for 6 months time.
My current AAoA is 3.7yrs,
newest acct is 1 month,
oldest acct is 12yrs
oldest open acct is 7 months and is a loan
Util is 8%
5 open accts/2 closed

Im wondering if the points gained by opening a new loan will be outweighed by the ding for new account and AAoA (current eq fico8 is 754)

[Anonymous]

At one point you describe a person who has exactly two open loans (an auto and an SSL) both of which are at under 9%.  It's unclear to me whether this is a pure hypothetical or whether this is in fact you as of right now.

If it is your current state, then paying off one of the loans will not affect your score, since your remaining open loan will be at under 9%.

When you add another large loan down the road then you will lose score points (temporarily) since your (total) installment utilization will go up.  You will gain these points back to the extent that you can move your open loans back to being under 9%.

[Revelate]

Yeah just temporarily seems to be an awfully long time for me with my mortgage haha.

I'm closing in on 80%, going to get clean before I cross that boundary and see if I can get a discrete change though I've been getting some points back from my stupid snafu and it might be hard to isolate.

[SouthJamaica]

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@Anonymous wrote:
Ive been studying up on inst. loans and how they effect credit. Correct me if wrong:
1. most possible points gained by having one (or all) installment loan/s open AND with <9% balance.

True for FICO 8 and FICO 9. Not as clear for mortgage scores.

2. Next best would be having one open loan with 9 to 100% balance remaining.

Not so clear.

3. Having no open loans (or closed) is a deduction and the worst of the 3.

Not so clear.

Question time: is there any "ding" for having say an SSL with <9% and an auto loan with <9%?

Installment utilization is computed on an overall basis only. And the impact of installment utilization varies wildly depending on profiles and scoring models.

I have an installment loan with a 2$ balance that must be paid off this month and Im wondering what my best options are for not losing the points. I am thinking about buying a newer car for my family but will not be able to pay it down to 9% for 6 months time.
My current AAoA is 3.7yrs,
newest acct is 1 month,
oldest acct is 12yrs
oldest open acct is 7 months and is a loan
Util is 8%
5 open accts/2 closed

Im wondering if the points gained by opening a new loan will be outweighed by the ding for new account and AAoA (current eq fico8 is 754)

You don't say whether the loan you're paying off is your only open loan, and you don't give us much information about the rest of your profile, so it's hard to say.  But if the one being paid off is your only open loan, then yes you will lose points in FICO 8. In my profile the TU mortgage score reacts slightly negatively, and the EX and EQ mortgage scores are completely indifferent to it. Others have reported different results.

IMHO you should at least temporarily go with the concept of avoiding the inquiry, avoiding the 'new account' penalty, avoiding the negative impact on your average age of accounts, avoiding the impact of a big hardly paid off loan... and try not replacing it... and see how it works out.

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