If an auto loan drops below the 88.9% threshold, would that increase my score? I have been making payments early and paying more than the minimum on my Cap1 auto loan, so my loan is quickly approaching 88.9% of the original balance.
@Anonymous wrote:Thresholds with respect to installment loans are tough to nail down. With mortgages, one is viewed as "considerably paid down" somewhere between 70%-80% utilization. As for non-mortgage installment loans, the most significant gain is seen when crossing the 8.9% threshold point. Member SJ from what I remember saw a significant (say, 15-20 point) gain from crossing that threshold on his only loan, but saw little increase prior to that.
My general theory is that for non-mortgage installment loans, roughly 1/3 of the points gained from the presence of the loan are obtained between the loan being at 100% utilization and ~9% utilization, and 2/3 of the points gained from crossing that 8.9% threshold. That being said, if an installment loan is "worth" (say) 30 points, one may only expect to gain 10 points in taking it from 100% to 9% utilization, then 20 points from crossing that 8.9% threshold. So, if you look at 10 points for something in the realm of a 90% utilization span, point gains over that span are going to be overall insignificant.
True, any increments which came before that were small. But it seemed there were some. Recently I came across some evidence in this forum which made me think that 89% might be a threshold of some sort in FICO 8.
@Anonymous wrote:I am at 74% on my auto loan right now. I will see if getting it below 70 (which should be in the next month or two) will make a difference. For science.
@Anonymous wrote:I am at 74% on my auto loan right now. I will see if getting it below 70 (which should be in the next month or two) will make a difference. For science.
It's also extremely difficult under most circumstances to determine if such a point is indeed a threshold, because any gains realized are likely very small; perhaps we're talking 3-4 points for example. That being said, there are always a ton of different things going on with profiles that can result in 3-4 point gains like inquiries becoming unscoreable, revolving balance changes, number of accounts with a balance decreasing, AAoA/AoYA/AoOA increases, etc. For someone to really know for sure, they'd need to have access to daily FICO scores/reports in order to isolate a score change to only the [reported] balance change on the installment loan. It could also be isolated with two (before & after) carefully timed $1 CCT trials, but not many people are willing to test on that level 