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Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?

Valued Member

Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?

I am looking for strategies to improve my Experian FICO 2 score used in mortage lending very quickly.

 

Currently, I have 0 installment or mortage lines open and 4 revolving lines (2 are authorized user lines), all paid to close to 0% utilization.

 

As we all know, opening an installment loan and paying it down to < 8.9 or 9% can add an extra 15--25 points to FICO 8 score for people have have no other open installment/mortage lines. This is why Alliant CU installment loan hack became so popular.Smiley Very Happy

 

My question is: Does anyone know if the same installment loan approach also works to boost FICO 2 mortage scores?

 

Thanks in advance!!

13 REPLIES
Senior Contributor

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?


seattlecredit08 wrote:

I am looking for strategies to improve my Experian FICO 2 score used in mortage lending very quickly.

 

Currently, I have 0 installment or mortage lines open and 4 revolving lines (2 are authorized user lines), all paid to close to 0% utilization.

 

As we all know, opening an installment loan and paying it down to < 10% can add an extra 15--25 points to FICO 8 score for people have have no other open installment/mortage lines. This is why Alliant CU installment loan hack became so popular.Smiley Very Happy

 

My question is: Does anyone know if the same installment loan approach also works to boost FICO 2 mortage scores?

 

Thanks in advance!!


According to the SSL Technique thread, it will only help with ONE of the mortgage scores.  I can't remember which, go read the first few posts of that thread to look it up.  If it raises that one score enough to be a higher middle score, it'll do its job.

 

How much do you need to raise your mortgage FICOs?  Utilization plays a big part in it, so if your utilization isn't at the AZEO number, you may be leaving some points on the table.

 

Also, utilization breakpoint is 9%, not 10%, please correct your post so others don't get confused.  LESS than 9% is key (8.9% or lower).

Message 2 of 14
Valued Member

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?


ABCD2199 wrote:

seattlecredit08 wrote:

I am looking for strategies to improve my Experian FICO 2 score used in mortage lending very quickly.

 

Currently, I have 0 installment or mortage lines open and 4 revolving lines (2 are authorized user lines), all paid to close to 0% utilization.

 

As we all know, opening an installment loan and paying it down to < 10% can add an extra 15--25 points to FICO 8 score for people have have no other open installment/mortage lines. This is why Alliant CU installment loan hack became so popular.Smiley Very Happy

 

My question is: Does anyone know if the same installment loan approach also works to boost FICO 2 mortage scores?

 

Thanks in advance!!


According to the SSL Technique thread, it will only help with ONE of the mortgage scores.  I can't remember which, go read the first few posts of that thread to look it up.  If it raises that one score enough to be a higher middle score, it'll do its job.

 

How much do you need to raise your mortgage FICOs?  Utilization plays a big part in it, so if your utilization isn't at the AZEO number, you may be leaving some points on the table.

 

Also, utilization breakpoint is 9%, not 10%, please correct your post so others don't get confused.  LESS than 9% is key (8.9% or lower).


Thanks. Post corrected and I will see what I can find from other threads and will post here my findings for the benefit of others.

 

On utilization, I pretty much squeezed all I could (they are all at 0% with 1 reporting a tiny balance) but I will carefully review accounts this month before statements close to see if I can scrape a couple more points.

 

Thanks!!

Message 3 of 14
Senior Contributor

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?


seattlecredit08 wrote:

 

On utilization, I pretty much squeezed all I could (they are all at 0% with 1 reporting a tiny balance) but I will carefully review accounts this month before statements close to see if I can scrape a couple more points.

 

Thanks!!


Oh yeah, if all are $0 except 1 at < 8.9%, you're as good as you can get there.  Check the dates of other things to see if any of those will bring points back in a month or three.  Some things to look for:

 

  1. Most recent inquiry -- if it's less than 6 months old, at 6 months it may start returning some points until 12 months when it scores for 0.  So if you have recent inquiries, they will hurt less at 6 months and not at all at 12 months.
  2. Most recent account -- a new account hurts FICO the most for 0-3 months, less for 3-6 months, and then not that much after.
  3. AAoA -- if you are under 24 months AAoA, you should see a decent bump at 24 months.  If you are above 24 months, you should see a small bump as you progress over the next year-ish threshold, up to the 7.5 year threshold for AAoA.
  4. Late payments -- 30D and 60D lates hurt the most for 0-23 months.  If you have any recent lates that are aging past 24 months soon, you may see a decent bump.
Message 4 of 14
Super Contributor

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?


seattlecredit08 wrote:

I am looking for strategies to improve my Experian FICO 2 score used in mortage lending very quickly.

 

Currently, I have 0 installment or mortage lines open and 4 revolving lines (2 are authorized user lines), all paid to close to 0% utilization.

 

As we all know, opening an installment loan and paying it down to < 8.9 or 9% can add an extra 15--25 points to FICO 8 score for people have have no other open installment/mortage lines. This is why Alliant CU installment loan hack became so popular.Smiley Very Happy

 

My question is: Does anyone know if the same installment loan approach also works to boost FICO 2 mortage scores?

 

Thanks in advance!!


In my personal experience, it had zero effect on the EX score, but did have some positive effect on the TU score. I never found out about EQ because it didn't report there.

 

However, more knowledgeable people than myself (I think @Revelate and @Thomas_Thumb may be among them) think just the opposite -- i.e. that it helps a little with EX while TU is indifferent.

 

 


FICO8 EQ 776 TU 789 EX 764 Total revolving limits 569900 (484900 reporting)
Message 5 of 14
Community Leader
Super Contributor

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?

The consensus at one time was that EX benefitted but the other two bureaus did not.  That seemed fairly reasonable since the EX mortgage model is FICO 98 and the EQ and TU mortgage model is FICO 04.  But last year contributor SouthJ executed a test and appeared to find that EX was not helped but that exactly one of the other two bureaus was helped.  That is a priori strange, since you'd think that if TU was helped then so would EQ and vice versa (since they both use FICO 04).  But his test seemed to show this -- SouthJ can tell you more about it.

 

I'd personally love to see this experiment run by multiple people.  We have very little test data on it.

Message 6 of 14
Super Contributor

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?


CreditGuyInDixie wrote:

The consensus at one time was that EX benefitted but the other two bureaus did not.  That seemed fairly reasonable since the EX mortgage model is FICO 98 and the EQ and TU mortgage model is FICO 04.  But last year contributor SouthJ executed a test and appeared to find that EX was not helped but that exactly one of the other two bureaus was helped.  That is a priori strange, since you'd think that if TU was helped then so would EQ and vice versa (since they both use FICO 04).  But his test seemed to show this -- SouthJ can tell you more about it.

 

I'd personally love to see this experiment run by multiple people.  We have very little test data on it.


EX didn't react, TU did react significantly. I never found out about EQ because the event didn't report there.


FICO8 EQ 776 TU 789 EX 764 Total revolving limits 569900 (484900 reporting)
Message 7 of 14
Super Contributor

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?

SJ, when you say that TU reacted significantly, can you quantify that in number of points?

Message 8 of 14
Super Contributor

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?


BrutalBodyShots wrote:

SJ, when you say that TU reacted significantly, can you quantify that in number of points?


Yes. It was a 13-point move (as compared to a contemporaneous 37 point move in FICO 8).


FICO8 EQ 776 TU 789 EX 764 Total revolving limits 569900 (484900 reporting)
Message 9 of 14
Valued Member

Re: Question for FICO Experts: Will Installment Loan Improve Experian FICO 2 Score?


SouthJamaica wrote:

BrutalBodyShots wrote:

SJ, when you say that TU reacted significantly, can you quantify that in number of points?


Yes. It was a 13-point move (as compared to a contemporaneous 37 point move in FICO 8).


Very interesting. Was this a 13-point move with the balance of the installment loan already reporting under 9%? And did the new instllment account impact AAOA at the time?

 

By the way, a slightly separate question-- what is the general consensus nowadays with respect to opening a brand new installment loan right before a mortgage application that will report as paid to 9% but will only show 1 month of history? 

 

Thanks!

Message 10 of 14