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I have an open installment loan that is only reporting on EQ. There is also a closed/paid auto loan on all 3 so am wondering if that loan is satisfying the criteria listed below (Category 1 &2)
Since Mortgages are considered 'extra credit' per se I do not believe my mortgage tradelines ( A closed/paid mortgage and an open mortgage on all 3) satifies the initial requirement. Trying to see if I need to contact the Lender to ask they report it to EXP & TU; otherwise, if the closed auto loan is sufficient than I'll leave well enough alone.
Thanks
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B. Mix Diversity
For FICO, there are 6 recognized account types (and having at least one of each in the first two categories on your CR is known to satisfy the "Diversity" scoring factor and give bonuses; it appears the addition of a third category or a sufficient number of bankcards could give additional Mix Diversity points.
The fifth category is not known to give any additional bonus, and the sixth category is negative and penalizes.
i. Revolving (CCs, most PLOCs, HELOCs);
ii. Loans (automobile loans, personal loans, student loans, recreational and vehicle loans, Credit builder loans [SSLs], etc.);
iii. Open-ended (True Chargecards, although these are classified as a separate category for mix, there is no evidence that it offers additional points).
iv. Mortgage Loans Mortgage loans, while installment, are in a category of their own.
v. Retail Accounts While these are typically revolving, they are in their own category and don't seem to offer any additional points.
You pose an interesting question- I've always understood mortgages to be included as an installment for satisfying credit mix requirements - but the wording in the Primer does suggest a caveat exists and I'd like to bring @Anonymous into this discussion for clarification.
Your closed auto does still count for credit mix. The bonus points we see gained (or lost once paid in full) with open installments comes from low installment util/amounts owed categories.
@thornback I agree with you. Always thought mortgages were included in 'primary' installment requirement but clearly that not the case. Thanks for adding Birdman to the chat; perhaps he will have some insight.
@thornback wrote:You pose an interesting question- I've always understood mortgages to be included as an installment for satisfying credit mix requirements - but the wording in the Primer does suggest a caveat exists and I'd like to bring @Anonymous into this discussion for clarification.
Your closed auto does still count for credit mix. The bonus points we see gained (or lost once paid in full) with open installments comes from low installment util/amounts owed categories.
@thornback From as far as I can tell, those 6 categories are the different recognized categories for the fico algorithms. I can't remember whether I pulled it from MF or a fico document. Negative Reason Codes demonstrate mortgages are evaluated separately for presence and utilization, imho.
now, if you didn't have an non-mortgage loan and had a mortgage, it would be just like having a non-mortgage loan and not having a mortgage; it's still another type.
So, as long as you have a card and a mortgage or a card and a non-mortgage loan, you're doing pretty good as you have at least two types, one revolving and one loan.
I'm not convinced that a third type is necessary and I have been unable to verify an additional point gain for adding a third type, but I've been unable to rule it out either.
nevertheless, if you have one or the other and a card, you should be good; if you have all 3, you're maybe better.
@Aspireto850 wrote:
I have an open installment loan that is only reporting on EQ. There is also a closed/paid auto loan on all 3 so am wondering if that loan is satisfying the criteria listed below (Category 1 &2)
Since Mortgages are considered 'extra credit' per se I do not believe my mortgage tradelines ( A closed/paid mortgage and an open mortgage on all 3) satifies the initial requirement. Trying to see if I need to contact the Lender to ask they report it to EXP & TU; otherwise, if the closed auto loan is sufficient than I'll leave well enough alone.
Thanks
-------------------------------
B. Mix Diversity
For FICO, there are 6 recognized account types (and having at least one of each in the first two categories on your CR is known to satisfy the "Diversity" scoring factor and give bonuses; it appears the addition of a third category or a sufficient number of bankcards could give additional Mix Diversity points.
The fifth category is not known to give any additional bonus, and the sixth category is negative and penalizes.
i. Revolving (CCs, most PLOCs, HELOCs);
ii. Loans (automobile loans, personal loans, student loans, recreational and vehicle loans, Credit builder loans [SSLs], etc.);
iii. Open-ended (True Chargecards, although these are classified as a separate category for mix, there is no evidence that it offers additional points).
iv. Mortgage Loans Mortgage loans, while installment, are in a category of their own.
v. Retail Accounts While these are typically revolving, they are in their own category and don't seem to offer any additional points.
You are losing Fico points on CRAs that don't show an open installment loan of any type. My data suggests the penalty is greater on TU and EQ than EX. I paid off my only open loan (a mortgage) in November. The below is EQ BCE Fico 8. The initial deep dip is due to a high reported revolving utilization in combination with the loan closure. Subsequent months are at low revolving utilization with no open loan. The open mortgage absolutely helped my Fico 8 scores - so get it reporting on all three CRAs.
BTW - a mortgage is an installment loan. The "Lack of recent installment loan information" only showed up after the mortgage was paid off. I have had multiple mortgages but, never any other type of loan since 1989. [You don't need to have an open mortgage to satisfy the "recent installment" criteria ... but an open mortgage is an installment and should satisfy the "recent installment" criteria by itself.] Side note: The industry enhanced Auto Fico versions specifically want to see an Auto loan. However, lack of said loan is minimal.
@Aspireto850 I definitely agree that you're leaving points on the table if you do not have an open loan reporting (mortgage or non-mortgage), but I believe that derives from the amounts owed category rather than mix.
Edited.
TT thoughts?
@thornback Thanks
@Thomas_Thumb Thought I was clear until I read your post . The 'primers' listed in my original post doesn't include mortgage in the category type 1 or 2 that is required but rather gives bonus points for it. At least that's my interpretation of what I read. All my credit reports give me a green for credit mix; nonethless, still asking the question.
here's what i have:
Am I getting the max amount of points for this category?
Thanks for the info. Stay safe.
@Aspireto850 wrote:@thornback Thanks
@Thomas_Thumb Thought I was clear until I read your post . The 'primers' listed in my original post doesn't include mortgage in the category type 1 or 2 that is required but rather gives bonus points for it. At least that's my interpretation of what I read. All my credit reports give me a green for credit mix; nonethless, still asking the question.
here's what i have:
- open mortgage account (reporting on all CBs)
- Open installment loan (reporting on EQ only)
- closed installment loan (reporting on TU & EXP)
Am I getting the max amount of points for this category?
Thanks for the info. Stay safe.
@Aspireto850 The Scoring Primer says it could offer additional points, not that it does or that it will.
we know you get Mix points for having a non-mortgage loan and for having Revolvers, and the number of bankcards can influence Mix.
It also seems mortgages satisfy the diversity requirement, just like a non mortgage loan would, but I can't conclusively say whether or not you would earn additional points by having one from both categories. It would be kind of hard isolate due to the amounts owed factor coming into play.
but in my humble opinion, if you have mortgage loan on all 3, you should be good as far as Mix. But the amount owed is not going to give you full points until you're under 10% threshold, Aggregate.
jmho.
and maybe I should update the language to reflect having Revolvers and a non-mortgage loan/mortgage loan.
@Aspireto850 Edit: by the way, since you still have a closed installment on the other 2, you're still getting the Mix points for it. But by having it open, you can also get points from the Amounts Owed category imo.
are there any differences among the 3 bureaus for your CRs, other than the installment loan not reporting on the other two?
I think mortgages are treated differently from other loans with regard to amount owed. I never saw a score improvement taking my mortgage balance/loan ratio from 40% => 30% => 20% => 10% => 5% => 2% => 1%. I believe the way this loan type treats amount owed is one reason why it is differentiated from other loan types. The other reason being loan duration.
The penalty associated with no open loan is a bit like no revolving credit cards with reported balances. Not sure how that correlates to amount owed. The Fico model(s) don't recognize point in time activity and default to a no recent experience penalty. Closest category is the one associated with file age/history IMO.
@Thomas_Thumb wrote:I think mortgages are treated differently from other loans with regard to amount owed. I never saw a score improvement taking my mortgage balance/loan ratio from 40% => 30% => 20% => 10% => 5% => 2% => 1%. I believe the way this loan type treats amount owed is one reason why it is differentiated from other loan types. The other reason being loan duration.
@Thomas_Thumb you may be exactly right & as you have taught us before, loans can offer points independent of utilization.
Do you think if somebody immediately paid down a mortgage rather than waiting years that there might be a different result? Do you think the mortgage may have been treated that way because it was being paid off organically?