@Anonymous wrote:Don’t worry about the fact you didn’t pay it down right away. NFCU reports the loan as soon as it’s approved, which I found out the hard way. Took my loan out Wednesday, paid it down as soon as the account showed up Wednesday evening to 8.9% and I got an Experian alert yesterday that my score dropped and I had a new account. They reported the entire balance of the loan and won’t report the payment until next month.
You don’t have to make payments every month to keep the loan active, it’s suggested to make a payment at least once every 6 months so they don’t stop reporting. It’s crucial that you don’t get the outstanding amount too small or you risk them forgiving the loan early. Try to keep it above $50 for the duration of the loan.
I paid mine down within hours, and it never reported the bad way. Since I was making the payment from funds sitting in savings, it processed quickly.
@Anonymous wrote:
@HeavenOhio wrote:I'm really inexperienced with this stuff, but I have to agree that a $100 balance is probably too low to hang onto the loan for a while.
@gman, you mention that this is a personal loan. Is it secured or unsecured? Either way, before bringing the balance down to 8.9% or less, make sure that your next payment due is pushed way far into the future (as SJ mentions). If it isn't, people here may want to offer different advice for handling this.
When you added the loan, there were potential scoring penalties for adding a new account, reducing your average age of accounts (AAoA), and reducing your age of youngest account (AoYA). There's a potential gain for adding a loan when you haven't had one before as you're improving your "credit mix." And there's a probable gain for paying it down to 8.9% or less. The credit mix gain doesn't generally offset the new account losses until some time has elapsed. But paying down the loan should quickly make your score higher than it was when it started.
I have found evidence an installment loan may not reset AoYA, at least on my profile. I hit 12 months AoYA on the 1st and received my points: https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/12-mo-AoYA-awards-clean-aged-thick/td-p/5697169/jump-to/first-unread-message
On the 2nd the loan reported reported: https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/New-loan-awards-quot-clean-aged-thick-no-new-acct-quot/td-p/5698382/jump-to/first-unread-message
Thoughts?
It resets your age of youngest account. It is a new account for all purposes.
