NON Mortgage Related Installment Loans

[Gardenhand]

So I jumped the gun after closing on my mortgage May 31st. Soon after I paid and closed my Alliant secured installment loan. As expected my score dropped significantly as it was my only open installment loan. Fast forward to today and my mortgage has still not reported yet. 

Its not really a problem because I still was able to open two new credit cards that I wanted to add to my portfolio even with my scores now in the 730s, down from 770s. Still I'm waiting for the mortgage to report hoping for a bounce back up. I don't expect to reach 770s right off the bat because my secured loan was paid down under 9 percent and the mortgage is near 100 percent.

one thing I'm unclear on, after getting approved for the Chase credit card they sent me some language about why I got the APR and limit I did. It said I had no recent open NON mortgage related installment loans. So it seems that after my mortgage reports I will still have no NON mortgage related installment loans. Will I be missing out on a piece of the potential installment points?

Any insight is appreciated.

[Anonymous]

A number of us (Thom Thumb I believe may be an example) have viewed as significant the reason codes that specifically call out NON mortgage installment debt.  It would be odd for these to still being generated if the recent FICO models were not making some kind of distinction -- that's the opinion of some of us at any rate.

Fortunately you will be in a very nice place to test this in a couple months, if you are willing to take a swing for the sake of science.  You will have a profile where, for all three reports, you have a mortgage but no other open installment loans of any kind (personal, auto, student, etc.)  Is that right?

If so, you can wait until your scores stabilize (two months after the mortgage has been reporting, say) and then add a Share Secure loan with Alliant again.  THere's no hard inquiry so it is pretty painless and perfect for "test" purposes.  Be sure to use the full approach and pay it down to < 9%.

If you are willing to do this, I'd be glad to help you out (perhaps via a PM) to give you guidance on how to test.  It involves making sure that all other factors that might cause score changes are eliminated.  You do things like making sure that you have exactly the same number of cards with a $0 balance before and after, the same total CC utilization, and you also time it so that your AAoA isn't going to cross over an integer mark  

If you get no score change by adding it, then it will strongly suggest that the reason code was lender driven and not part of the FICO 8 model.  If you do get a significant score boost, it will imply that FICO 8 is making some kind of distinction (between mortgage and non-mortgage debt).

[Gardenhand]

Yes that's correct. I have NO open installment loans on my reports. There is a mortgage about four months old that is yet to report. My AAOA is over one year and less then two. With all of my accounts including the mortgage I project my AAOA to hit two years around April. This is an estimate from old math. Regardless I don't believe a new secured loan would effect my AAOA.

The few things that I question would cloud an experiment like this:

I have INQS that are less then one year. One ages over one year in October, two age over one year end of November and the others age over one year between April and September. I've been busy but all my reports are now frozen. I have about six INQS under one year on each report.

Another thing I wonder about is my new accounts. I'm under the impression that having new accounts will effect your score. I have five cards and one mortgage. Four of my cards are under one year. The mortgage is also under one year. I'm guessing if there is a penalty for having too many new accounts in ratio of total accounts I'm getting pentilized. However two of my cards will turn one year end of November so that may change my new account ratio making it appear a new secured loan made a positive splash when it was the new accounts aging.

Any thoughts on these concerns? I did close my Alliant savings account after closing the old secured loan. 

[Anonymous]

Yup, these are all valid points.  I thought about raising them in my initial response, but I didn't want to scare you off the idea of doing the test!  So I tried to just hit the big ones.  BTW, you are really sharp!

The right thing to do, which you are already very much on top of, is to make a projected list over the next nine months of possible "credit score events."  Some of these we know for sure could have an effect, Some others are harder to pin down but should be listed anyway.  Here is an example of what the projected timeline might be:

October:   

One inquiry crosses over 1 year in age

Mortgages appear (?)  Might be November.

Late November:

Two more inquiries cross over 1 year in age

Two young accounts become 1 year in age

December-March

No credit score events

April

AAoA crosses over 2.0 years.  This event might be pushed back a tiny amount if you add a new SS loan before March.

Is this a complete list of projected events?   And are the times associated right?  I assume you have no lates or other derogs?

If so it looks like you could add an SS loan with Alliant around Christmas with no confounding factors from the rest of your report.  (Actually if you really want to be 100% certain, it would be useful to know when your oldest account has a birthday and how old it would be at that point.)

Of course, you'd need to make sure that the number of credit cards reporting $0 is the same before the loan and after and that your total CC utilization is the same before and after as well.  And you'd need an accurate tool for pulling all three scores on the same day.

I really hope you decide to do this!  :-)

[Revelate]

Did the Chase letter have FICO written on it and a score?

If not, ain't no way those were reason codes for FICO; I know all my FICO reason codes included both mortgage and non-mortgage installment loans together, but I haven't kept up with the forum well enough in the past six months or longer to really see if others had been found specific to FICO (unlike Vantage which helpfully publishes the entire list).

[iv]

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@Revelate wrote:

I know all my FICO reason codes included both mortgage and non-mortgage installment loans together, but I haven't kept up with the forum well enough in the past six months or longer to really see if others had been found specific to FICO (unlike Vantage which helpfully publishes the entire list).

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Well, FICO does claim that FICO 8 kept the same reason codes as older FICO versions:

http://www.fico.com/en/wp-content/secure_upload/FICO_8_Score_2456PS.pdf

And we know that "Lack of recent non-mortgage installment loan info" (just in NextGen, code F9) and "No recent non-mortgage balance information" (EQ5 code 17, TU4 code 17, EX2 code 17/R, and NextGen code G4) have existed as reason codes in some previous versions...

List of NextGen and older Classic codes here: 

http://www.fico.com/en/wp-content/secure_upload/FICO_Score_Reason_Codes_1424PS.pdf

Of course, that in no way guarrantees that those codes are actually in use in FICO 8 - "keeping the same reason codes" may just mean that they didn't add any NEW codes.

And only NextGen includes "...non-mortgage installment loan...", while the Classic definition of "...non-mortgage balance..." could easily extend to any type of tradeline, not just installments.  So it's possible that ONLY NextGen specifically cared about non-mortgage installment data.

[Revelate]

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@iv wrote:

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@Revelate wrote:

I know all my FICO reason codes included both mortgage and non-mortgage installment loans together, but I haven't kept up with the forum well enough in the past six months or longer to really see if others had been found specific to FICO (unlike Vantage which helpfully publishes the entire list).

---

Well, FICO does claim that FICO 8 kept the same reason codes as older FICO versions:

http://www.fico.com/en/wp-content/secure_upload/FICO_8_Score_2456PS.pdf

And we know that "Lack of recent non-mortgage installment loan info" (just in NextGen, code F9) and "No recent non-mortgage balance information" (EQ5 code 17, TU4 code 17, EX2 code 17/R, and NextGen code G4) have existed as reason codes in some previous versions...

List of NextGen and older Classic codes here: 

http://www.fico.com/en/wp-content/secure_upload/FICO_Score_Reason_Codes_1424PS.pdf

Of course, that in no way guarrantees that those codes are actually in use in FICO 8 - "keeping the same reason codes" may just mean that they didn't add any NEW codes.

And only NextGen includes "...non-mortgage installment loan...", while the Classic definition of "...non-mortgage balance..." could easily extend to any type of tradeline, not just installments.  So it's possible that ONLY NextGen specifically cared about non-mortgage installment data.

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I suspect FICO 8 was on simply not adding anything new, rather than it's being 1:1 identical.

There was a document published by credco (massive trimerge report vendor) which at least defines the ones for the mortgage trifecta which is admittedly interesting:

https://www.credco.com/assets/pdfs/datasheets/FICO-booklet.pdf

There's some departures in behavior specifically around installment loans on FICO 8 from the FICO 04 models though, via testing neither I nor a bunch of others ever got movements on the FICO 04 scores when it came to installment loan balances (of any type), but the document still lists a reason code there.  My reports on FICO 8 lumped mortgage/non-mortgage together:

Pre mortgage and before reindeer games TU FICO 8:

The remaining balance on your mortgage or non-mortgage installment loans is too high.

Post mortgage EQ FICO 8 baseline, AU, and BC:

The remaining balance on your mortgage or non-mortgage installment loans is too high.

I had that reason code on FICO 8 models until I dropped under 10% aggregate installment utilization, then it came back when my mortgage reported.  Hence one of my arguments that mortgage = auto = unsecured personal = secured share loan basically.

[tricie17]

Yes.  The Credit fico models likes to see a full circle credit record.  My mother has a mortgage reporting with no non mortgage installment loan which keeps the credit card companies hammering on that issue.  Scores are not impacted but a lot of the better credit card companies see this as some issue.  I take it that your Apr was higher regardless of numbers and history!!

[iv]

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@Revelate wrote:

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iv wrote: Well, FICO does claim that FICO 8 kept the same reason codes as older FICO versions: http://www.fico.com/en/wp-content/secure_upload/FICO_8_Score_2456PS.pdf

And we know that "Lack of recent non-mortgage installment loan info" (just in NextGen, code F9) and "No recent non-mortgage balance information" (EQ5 code 17, TU4 code 17, EX2 code 17/R, and NextGen code G4) have existed as reason codes in some previous versions...

List of NextGen and older Classic codes here: 

http://www.fico.com/en/wp-content/secure_upload/FICO_Score_Reason_Codes_1424PS.pdf

Of course, that in no way guarrantees that those codes are actually in use in FICO 8 - "keeping the same reason codes" may just mean that they didn't add any NEW codes.

And only NextGen includes "...non-mortgage installment loan...", while the Classic definition of "...non-mortgage balance..." could easily extend to any type of tradeline, not just installments.  So it's possible that ONLY NextGen specifically cared about non-mortgage installment data.

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I suspect FICO 8 was on simply not adding anything new, rather than it's being 1:1 identical.

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Probably correct...

Reading between the lines seems to indicate that NextGen added a number of codes (see the second FICO doc linked above), but that generated backlash from lenders (whose systems were setup for the "traditional" Classic codes).

All FICO score versions (including FICO 9) released since the NextGen models appear to list "keeping reason codes the same" as a key feature - the implication does seem to be "no new codes".  Certainly possible that some old codes simply are now unused.  And since "Lack of recent non-mortgage installment loan info" only appeared in NextGen... that factor may have been discarded along with NextGen.

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@Revelate wrote:

There was a document published by credco (massive trimerge report vendor) which at least defines the ones for the mortgage trifecta which is admittedly interesting:

https://www.credco.com/assets/pdfs/datasheets/FICO-booklet.pdf 

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Yup.  Notice that the codes the CredCo publishes match the Classic codes in the FICO doc above?

I think the reason (no pun intended) that FICO hasn't published a changed reason code doc since http://www.fico.com/en/wp-content/secure_upload/FICO_Score_Reason_Codes_1424PS.pdf  is that those Classic codes are still the same in FICO 8/9.  (Although that doc hasn't actually changed in many years, the copyright date was last revved in 2013.)