New Auto loan. Understanding effect on score

[Shadowfactor]

My fiancé was upside down for a while on her new car purchase with a 7% interest rate. I finally started helping her pay down the loan in order to get it at the point where she could refinance it. We got the loan paid to 100% of the cars value.

Since I just joined Penfed to get a credit card. She was eligible then to join since she lives with me. She tried to refinance the loan herself but was quoted with a 6.5% interest rate. Which is better but wasn’t exactly great.
Her FIcO 8 scores are much higher then mine and she has a clean report. They sit around 780 across all 3. But she has a lot of student loan debt (~20K).

Since she had taken a hardpull to join and I had done the same thing for the credit card. I asked penfed if they could reuse that hardpull to check a refinance rate for a joint app.

We did the joint app and penfed offered 3.49% for 60 months which is the lowest they go for a 2017/2018 new auto refinance. We agreed to the loan and they are going to issue out a check.

I haven’t had an open installment loan reporting since 2011. When I paid off my last car loan and student loan.

The loan amount is 20K. She plans to pay around $75 more a month then the required payment to hopefully have it paid off in 4 years instead of 5.

What kind of effect is this going to have on my scores ? I know there is a boost for having an open installment loan reporting but since the loan will show maxed out for a while.
Will I see any kind of positive change ?

If I co-signed the loan. Will it say I’m a co-signer or just report as a joint auto installment loan ?

Thanks!

[SouthJamaica]

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@Shadowfactor wrote:
My fiancé was upside down for a while on her new car purchase with a 7% interest rate. I finally started helping her pay down the loan in order to get it at the point where she could refinance it. We got the loan paid to 100% of the cars value.

Since I just joined Penfed to get a credit card. She was eligible then to join since she lives with me. She tried to refinance the loan herself but was quoted with a 6.5% interest rate. Which is better but wasn’t exactly great.
Her FIcO 8 scores are much higher then mine and she has a clean report. They sit around 780 across all 3. But she has a lot of student loan debt (~20K).

Since she had taken a hardpull to join and I had done the same thing for the credit card. I asked penfed if they could reuse that hardpull to check a refinance rate for a joint app.

We did the joint app and penfed offered 3.49% for 60 months which is the lowest they go for a 2017/2018 new auto refinance. We agreed to the loan and they are going to issue out a check.

I haven’t had an open installment loan reporting since 2011. When I paid off my last car loan and student loan.

The loan amount is 20K. She plans to pay around $75 more a month then the required payment to hopefully have it paid off in 4 years instead of 5.

What kind of effect is this going to have on my scores ? I know there is a boost for having an open installment loan reporting but since the loan will show maxed out for a while.
Will I see any kind of positive change ?

If I co-signed the loan. Will it say I’m a co-signer or just report as a joint auto installment loan ?

Thanks!

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Which score? If you're talking about FICO 8 or FICO 9, your score will be affected positively by adding open installment loan to credit mix, and negatively for (a) lower age of newest account (b) lower average age of accounts and (c) maxed out loan. I don't know if the positive will outweigh the negative or not, but I'm guessing your scores will take a pretty big hit. Of course as time goes by and as the car loan gets paid down your points will creep back.

It's a mixed bag how scores other than FICO 8 and FICO 9 will react. All will react negatively to the new account, same as FICO 8 and 9, but only some will give you some credit for adding to 'credit mix'.

Your  FICO scores will generally be hurt.

[Shadowfactor]

I was talking in relation to FICO 8.

That’s what I was worried about was a huge FIcO 8 hit. My AAoA is going to be taking a hit soon as my 2 new cards report as well. It’s currently at 2.6 years with my youngest reporting card at 6 months.

I just started rebuilding a little over a year ago so I have a ton of new accounts but I have no debt.

Will this installment loan cause any issues with my credit cards ?
I don’t carry balances and always pay in full.

[Anonymous]

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@Shadowfactor wrote:
I was talking in relation to FICO 8.

That’s what I was worried about was a huge FIcO 8 hit. My AAoA is going to be taking a hit soon as my 2 new cards report as well. It’s currently at 2.6 years with my youngest reporting card at 6 months.

I just started rebuilding a little over a year ago so I have a ton of new accounts but I have no debt.

Will this installment loan cause any issues with my credit cards ?
I don’t carry balances and always pay in full.

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You mention that you have a ton of new accounts, but also believe that your two new cards will cause your AAoA to take a hit.  Any new account will cause your AAoA to go down at least a tiny bit, by definition.  But anxiety that this will consititute a substantial hit seems misplaced, if you indeed have a ton of accounts.  People who have a ton of accounts see very little impact to AAoA -- this is just a natural consequence of averaging in two zeroes to a large number of numbers.

You mention that you don’t carry balances and always pay in full.  That's commendable, in that it saves you money.  But it doesn't have any effect on your credit score.  What matters is your CC utilization, which is based in the amounts your CCs are reporting to the bureaus.  You could PIF every month and have a CC utilization in the 70-80% range (hurting your score a lot).  Or you could PIF and have a utilization around 1-5% (which would be very good).

[Shadowfactor]

With the amount of cards I have and most of them being under a year. I don’t expect the AAoA hit to be that bad.

I understand what you guys are talking about in regards to the credit card util.
I practice AZEO most of the time, Although sometimes having 2-3 cards report a small balance. Currently I have no cards reporting a balance this month. A charge on my USB card took a lot longer to post then it should have (6 days). I’ve been on the forums long enough and done enough research and trial and error that I have a good handle on how credit cards affect your score.

I don’t know that much about installment loans and their effects on your score and credit except the very basic stuff. I’ve been reading up on some topics here but it’s not as easy to learn as credit cards and scoring for me.

The last installment loans I had were during the start of college and both were paid off in 2 years. During that time. I didn’t understand credit at all and barely knew what a credit report was.

I guess my main concern is how it will affect my credit going forward.

I wasn’t thrilled about co-signing but my fiancé did it for me on 2 cards when my credit was trash so that I could secure the cards needed to travel overseas for work.
Plus we share finances as we are getting married soon so it’s only logical that I co-signed the loan so we could save around 3 grand or more on her car loan.

[SteelCityPride]

Not sure how this will or will not compare to your profile but here are some data points from my recent experience. I too have opened several cards this past year and AAOA is just over a year with a used car loan from PenFed just reporting. I have a small personal loan that I have under 8.9% paid and the last payment not due until next month, reported across all 3 CRA. This was my only installment and once it was under 8.9% all my scores went up around 30 points. I got another personal loan from Marcus soon after the boost but it only reports to TU, score dropped about 25-30 points once it was reported. With the new car loan a month later my EX and EQ both dropped 30 points but TU only dropped 3 points. Currently have two installments on EX and EQ with one about to be paid and closed and TU has three installments now with one also due to be paid and closed as well. In summary, basically seen 30 point drop across all three CRA's.

CC utilization has been 1% to 2% and AZEO or only 2 or 3 CC reporting last 3-4 months.

[Anonymous]

If you are willing to, try to document all the different scoring factors and then let us know what happens when the loan reports.  You'd be helping the "scoring theorists" who hang out on this board out a lot -- if we can get your profile into shape where it shows something meaningful.

The reason this is interesting is exactly what SouthJ explained.  On the one hand, FICO 8 likes it when you have at least one open loan compared with no open loans (scoring bonus).  On the other hand, FICO dislikes it when you owe almost all of the original loan amount (a penalty).

So you'd be helping us answer the question: is the penalty bigger than the bonus?

What we really need is for you to do a "before" and "after" shot of your reports along with the three FICO 8 scores.  Shortly before the loan appears (not on any bureau) and then shortly after it appears (on all three bureaus).  The best testing tool is the $1 trial offer at Credit Check Total.

Info we'd need in both before and after shots:

* The three FICO 8 scores

* Did any of your inquiries change between the two shots?  (A change means an inquiry becoming > 364 days old or a new inquiry appearing.)

* All credit cards listed with balances and credit limits as they appear on the report.  Did any credit cards cross over the 1 year mark in age?

* Do you have any derogs?  (Yes/No)  If so on which bureaus and did they change between the two shots?  (A derog could fall off, a new one could appear, or a Day 30 late could become 2 years old.)

* AAoA, Age of Youngest Account, and Age of Oldest Account between each shot.  Remember these might be different depending on the bureau.  (E.g. your Equifax AAoA might be different from your TransUnion AAoA.)

[Shadowfactor]

I don’t mind doing some research for the forum.

I asked discover to do an off cycle update with a $9 balance to bring back the 15 points I lost from having no cards reporting a balance. I also seem to get around a 10 point boost for having an AU card report a balance.

I’ve tried to signup for CCT in the past and it never lets me. Also with CCT being discontinued. Do you have any other recommendations for a 3B credit monitoring service that isn’t $30+ ?

I’m currently enrolled in the trial of Experian CreditWorks Premium. I get my Experian score daily but my next 3B refresh isn’t for another 23 or so days.

[Anonymous]

When do you expect that your TU FICO 8 will generated next via your Bank of America card?

[Shadowfactor]

It normally updates around the 19th of the month.

I will list all the reporting of scores I have available to me.

Experian EX - Everyday
Experian 3B - 8/1 Next Update

Discover EX - 8th or 9th
Amex EX - 16,23,29

Discover TU - 27th
BoA TU - 19th

I have no way to look at EQ right now expect once a month but I’ve read that Penfed provides your FIcO score but I believe I saw it was quarterly updates.

How long does penfed take to report new credit cards and auto loans. I’ve read it’s after your first statement.
The credit card showed up online about a week ago but it hasn’t come in the mail yet.

The auto loan showed up online this morning.

My Amex ED will start reporting July 29th or 30th.

The exact loan amount for auto is 21,010.

I can also do this research with my fiancé’s credit as well but she has several installment loans with all high balances which is why I needed to co-sign for her to get the lowest rate