Installments Vs. Revolving

[Jonesbro123]

Hello guy's I'm in need of some advice. Where should I put extra cash if I'm seeking to increase my fico faster.Should I pay more on my installment or credit card?

[jamie123]

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@Jonesbro123 wrote:

Hello guy's I'm in need of some advice. Where should I put extra cash if I'm seeking to increase my fico faster.Should I pay more on my installment or credit card?

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Welcome to the forum!

Your scores will actually drop if you pay off your installment loan. Yes, really! The credit reporting agencies want you to have an open installment loan on your reports and will give you points for having one.

Revolving balances on the other hand should be kept under 10% for the best scores.

[Anonymous]

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@jamie123 wrote:

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@Jonesbro123 wrote:

Hello guy's I'm in need of some advice. Where should I put extra cash if I'm seeking to increase my fico faster.Should I pay more on my installment or credit card?

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Welcome to the forum!

Your scores will actually drop if you pay off your installment loan. Yes, really! The credit reporting agencies want you to have an open installment loan on your reports and will give you points for having one.

Revolving balances on the other hand should be kept under 10% for the best scores.

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Your overall point is completely correct but it's not the credit reporting agencies that care about open installment loans, it's FICO with the 08 model.  CRAs couldnt care less.

[Anonymous]

There are a few variables that need to be considered because they can really sway guidance.

If the installment loan has a ridiculously high interest rate and assuming no ridiculous early termination fee, I would say screw the FICO credit score and get that loan paid off.  Keeping the interest paid to a minimum should take precedence over your score.

Now - Assuming an installment loan at a manageable / low rate, I would direct the your payments toward credit debt to get your utilization below 10%.