Revolving Credit Card or Installment Loan - which would hurt scores less?

[Anonymous]

Hi,

  Kubota tractor has a revolving credit card type loan. You apply for up to 20,000.00 limit. If I am approved for the 20,000.00 and use 10,000.00 of it to purchase, what would it do to my credit score? Current score 799 & 802.

Thanks,

RTJ

(edited title only to better reflect thread topic)

Message Edited by Scamp on 05-08-2009 07:36 PM

[Scamp]

Welcome to the forums!

If you haven't already, please read Credit Scoring 101 (link in my signature line), as the first couple of posts will give you some good info.

Also, we'd need to know your current credit situation before we can give a guess at how this new TL and purchase might affect your scores.  If you don't feel like posting back with all your current tradelines, including current balances, limits, etc., you might be able to get an answer from the FICO score simulator - if you obtained your scores and reports from here and can still access them, I think you can find the simulator on the the 'next steps' page.

Hope this helps.

(edited title only)

Message Edited by Scamp on 05-08-2009 07:37 PM

[Anonymous]

Hi Scamp,

   Thanks for the answer. I have multiple CC. Balanced paid every month. Never have carried a balance past the first due date. No interest. My current credit utilization(?) is less than one percent of available credit. It has never been over three percent. I have a house payment, car, truck, and RV payments. Never been late on any. I'll read more here, and possibly understand more. The rhyme and reason of credit scores sure are strange. Maybe it's just me.

Thanks again,

RTJ

(edited title only)

Message Edited by Scamp on 05-08-2009 07:38 PM

[score_building]

Nope, it's not just you, although it will likely all start to make more sense as you read on.  you apparently have a natural propensity toward good credit behaviour which is grreat!  much of what you learn as you explore here may just be icing on the cake.  GL with the loan!

(edited title only)

Message Edited by Scamp on 05-08-2009 07:38 PM

[Scamp]

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rtj49 wrote:

Hi Scamp,

   Thanks for the answer. I have multiple CC. Balanced paid every month. Never have carried a balance past the first due date. No interest. My current credit utilization(?) is less than one percent of available credit. It has never been over three percent. I have a house payment, car, truck, and RV payments. Never been late on any. I'll read more here, and possibly understand more. The rhyme and reason of credit scores sure are strange. Maybe it's just me.

Thanks again,

RTJ

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Glad to help, but because I'm a bit fuzzy on some of the finer points of scoring, I picked a few other brains who are better with that, on this, and it sounds like the best way for us to figure out what, if any score hit you'll take if you open this account and use it as described, is for you to let us know your current overall available credit - your most likely score hit would be the increased-utilization one.

(edited post title only)

Message Edited by Scamp on 05-08-2009 07:39 PM

[Anonymous]

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@Scamp wrote:

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@Anonymous wrote:

Hi Scamp,

   Thanks for the answer. I have multiple CC. Balanced paid every month. Never have carried a balance past the first due date. No interest. My current credit utilization(?) is less than one percent of available credit. It has never been over three percent. I have a house payment, car, truck, and RV payments. Never been late on any. I'll read more here, and possibly understand more. The rhyme and reason of credit scores sure are strange. Maybe it's just me.

Thanks again,

RTJ

---

Glad to help, but because I'm a bit fuzzy on some of the finer points of scoring, I picked a few other brains who are better with that, on this, and it sounds like the best way for us to figure out what, if any score hit you'll take if you open this account and use it as described, is for you to let us know your current overall available credit - your most likely score hit would be the increased-utilization one.

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Really?  With such high scores, I would think the inquiry and new account would be a seriously considerable ding.

(edited post title only)

Message Edited by Scamp on 05-08-2009 07:40 PM

[Anonymous]

Hi again,

  Which way takes less of a point deduction on my credit score? Obtaining the credit card, with $20,000,00 limit, and using $8,000.00 at once, or a installment type loan, with fixed payments? Thanks for any, and all help.

RTJ

(edited post title only)

Message Edited by Scamp on 05-08-2009 07:40 PM

[haulingthescoreup]

Generally, for scoring purposes, an installment loan is better.

The utilization on installment credit is calculated separately from that on revolving, and it carries much less weight in scoring. Also, if you have no open installment credit at the moment, a new loan can actually help your score a bit by diversifying your credit mix.