Is there a list of known thresholds?

[Thomas_Thumb]

Although home mortgages (typically 15 or 30 years) and car loans (typically 3 to 6 years) are installment loans, they are coded differently by Fico. A score boost has been reported for car loans passing below the 9% threshold. That was on a relatively young car loan.

There is some evidence that payment history is a factor in scoring for car loans in addition to mortgages. Let's say a profile only has one open loan and it is a car loan.

1) If that profile has 4 years payment history on a 5 year loan and the next payment takes B/L below 9% there may be no bump in Fico 8 score.

2) If that profile had 6 months payment history on a 5 year loan and a sizeable payment was made to bring B/L below 9% it might see a 20 to 25 point boost in Fico 8 score.

It should also be note that a profile with an open mortgage may not see any score change associated with paying down a car loan from a high B/L to a B/L under 9% even if the car loan is young. Why? Because mortgages typically are much higher dollar amounts than car loans and balance to loan ratios are considered in aggregate although some scoring attributes appear to consider loan type.

[Anonymous]

@Thomas_Thumb: So then home mortgages and car loans are not treated the same. Are there established or semi established thresholds other than 9% for Car loans? Are car loans no different than any non-mortgage installment loan then? Same as SSLs?
And is it simply the 80% threshold for home mortgages? And can you go over the points of difference between mortgage and non-mortgage installment loans please?

[Anonymous]

Member SJ here posted once regarding an auto loan crossing the 8.9% threshold and he saw a significant (say) 20-25 point gain I believe.  If an installment loan (verses none) is "worth" (say) 30-35 points on FICO 8, this would suggest that the paydown of over 90% of the loan only results in a 5-15 point gain and that crossing that final threshold is what matters most.

[Thomas_Thumb]

SJ's auto loan never even passed one years age before payoff. Therefore, his 20 or 25 point gain going below 9% was full monty. If the loan had a lengthy payment history of 3 years, the point gain associated with dropping below 9% would be less. There have been other posters not experiencing an additional gain, when making standard payments, and finally dropping below a 9% level after 3, 4 or 5 years.

Inverse and CAPTOOL have shared data which points to an installment loan B/L threshold in the 65% to 70% range.

[SouthJamaica]

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@Anonymous wrote:

Member SJ here posted once regarding an auto loan crossing the 8.9% threshold and he saw a significant (say) 20-25 point gain I believe.  If an installment loan (verses none) is "worth" (say) 30-35 points on FICO 8, this would suggest that the paydown of over 90% of the loan only results in a 5-15 point gain and that crossing that final threshold is what matters most.

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Good memory. Yeah my experience with the auto loan was that it affected FICO 8 the same way as my little SSL.

[SouthJamaica]

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@Thomas_Thumb wrote:

SJ's auto loan never even passed one years age before payoff. Therefore, his 20 or 25 point gain going below 9% was full monty. If the loan had a lengthy payment history of 3 years, the point gain associated with dropping below 9% would be less. There have been other posters not experiencing an additional gain, when making standard payments, and finally dropping below a 9% level after 3, 4 or 5 years.

Inverse and CAPTOOL have shared data which points to an installment loan B/L threshold in the 65% to 70% range.

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I can't believe what good memories @Thomas_Thumb and @Anonymous have

[Anonymous]

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@Thomas_Thumb wrote:

Inverse and CAPTOOL have shared data which points to an installment loan B/L threshold in the 65% to 70% range.

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So you think the element of time matters in addition to the utilization percentage?

What sort of data did they provide when crossing the possible 65%-70% utilization range?  What sort of point gains are we talking here, relative to the gains associated with dropping down below 8.9%?

[moosemoney]

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@Anonymous wrote:

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@moosemoney wrote:

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Anectodal, but in August 2018 I got a notification that my Mortgage had been significantly paid down and I got a 20 point jump when my utilization had dropped from 83% to 82%.

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When you say you got a notification, through what means?  Interesting that you saw a 20 point jump there.  This would be in line with the score jump expected from crossing the 8.9% threshold on a non-mortgage installment loan.  Also when you referenced 83% --> 82%, can you provide the exact (decimal) percentage points out to at least tenths?  With rounding I'm curious if the proposed threshold here is at 82% or 83%.  Thanks.

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Sure! I originially spotted the notification on the Discover Scorecard site. Here's my post in my progress thread from when it happened.

I mistyped in my original response, though. I actually went from 82% to 81% -- the more precise figures are this, though: I got the notification after my July 2018 mortgage payment had posted. Before that payment my principle balance was at 82.177188% utilization. After the July payment (that triggered the notification and jump) the balance was at 81.795863% utilization. Keep in mind this only happened on my Experian. The other two bureaus did not show any type of major jump from this.

I am currently at 78.716165% utilization and I have yet to receive another notification or jump. I will definitely update when/if that happens. My mortgage was opened in December 2007 if that helps at all.

[Thomas_Thumb]

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@Anonymous wrote:

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@Thomas_Thumb wrote:

Inverse and CAPTOOL have shared data which points to an installment loan B/L threshold in the 65% to 70% range.

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So you think the element of time matters in addition to the utilization percentage?

What sort of data did they provide when crossing the possible 65%-70% utilization range?  What sort of point gains are we talking here, relative to the gains associated with dropping down below 8.9%?

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It certainly appears that age of the loan and/or payment history have some type of influence on points allocated toward B/L ratio. I even suspect that a SSL loan may not see as much of a score boost going below 9% if it was already 3 years old. However, the point of an SSL is immediate point boost so why keep B/L above 9%?

My hypothesis is a low installment B/L is a short cut for getting points that would otherwise come over time from payment history/loan age. This could be tested by those that have a single aged loan still above 9% (say 12% and paying down to 8%). Unfortunately, if someone has multiple open loans then other things come into play.

BTW - for mortgages there may be a couple B/L thresholds above 50% but, specifics are hard to nail down. Someone could put a table together listing various reported data points over the past few years to zero in on more commonly reported thresholds. However, that would take a lot of effort and other factors may be influencing numbers in some cases.

[Anonymous]

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@Thomas_Thumb wrote:

My hypothesis is a low installment B/L is a short cut for getting points that would otherwise come over time from payment history/loan age. This could be tested by those that have a single aged loan still above 9% (say 12% and paying down to 8%). Unfortunately, if someone has multiple open loans then other things come into play.

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Your hypothesis was shown to be correct on my scorecard: 17% to 8.47% on 1 SSL increased my TU FICO 8 score +62 points. I went from 666 to 728 in December 2018. 11 monthly payments had been reported and recorded at TU. My profile was only scoreable as of June 2018, or 6 months after I opened the loan.

I opened the loan in December 2017 with absolutely nothing on my credit file prior to that. I applied for my first credit card - from the same CU where I got the credit builder loan - after the score jump. I didn't know about the SSL technique at that time, so I walked into my CU thinking I still had a TU score of 666. I was pretty shocked when they did the HP and told me the current score.