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Installment Loans and Credit Utilization

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Anonymous
Not applicable

Installment Loans and Credit Utilization

If I need a personal loan for let's say $15,000, would it be better for my FICO if I were to take a loan for $20,000 and then immediately repay $5,000.  I understand that the payments won't change but if there is no prepayment penalty, and the difference in APR is negligible -- doesn't this give me a better utilization?  

 

Every banker that I have proposed this to or asked has looked at me like I had horns.  

Message 1 of 4
3 REPLIES 3
AllZero
Mega Contributor

Re: Installment Loans and Credit Utilization

Wear your horns proud. Your logic is sound. How about a $25k loan instead and pay back $10k?
Message 2 of 4
M_Smart007
Legendary Contributor

Re: Installment Loans and Credit Utilization


@Anonymous wrote:

If I need a personal loan for let's say $15,000, would it be better for my FICO if I were to take a loan for $20,000 and then immediately repay $5,000.  I understand that the payments won't change but if there is no prepayment penalty, and the difference in APR is negligible -- doesn't this give me a better utilization?  

 

Every banker that I have proposed this to or asked has looked at me like I had horns.  


@Anonymous.. you could do like me on a $25K Installment,

  let it report @ 100%  and watch your Experian score drop -27 points . (and yes ..I am dead serious)

Glad FICO8 has no memory, because it will report at almost paid next month.

 

Shoulda just pulled the money out of HSBC.   

 

It was a good test though ..

 

ETA: The good part is, I will have an open installment loan reporting with a small balance for 5+ years!

 

Message 3 of 4
KLEXH25
Valued Contributor

Re: Installment Loans and Credit Utilization


@Anonymous wrote:

If I need a personal loan for let's say $15,000, would it be better for my FICO if I were to take a loan for $20,000 and then immediately repay $5,000.  I understand that the payments won't change but if there is no prepayment penalty, and the difference in APR is negligible -- doesn't this give me a better utilization?  

 

Every banker that I have proposed this to or asked has looked at me like I had horns.  


Bankers are too practical to appreciate your genius 😆



Message 4 of 4
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