Assuming the loan reports with a balance of 100% of the original loan amount, you're going to lose points due to the high loan-balance-to-original-amount ratio, possibly lose points due to a decreased average age of accounts, possibly lose points because of a new account reporting, and possibly lose points due to the inquiry or inquiries. But adding an open installment loan when none are present will also raise your score due to credit mix. It's very profile-dependent whether the good outweighs the bad right away, so there is no "one right answer" here. Once the loan balance gets to 89% or lower, you should see some modest score gains, and once it gets to 9% or lower you should see even more benefit.
@Charmante wrote:So, remember I have NO Installment Loans and you all said my score would improve with one.
I just signed paperwork on a new auto loan...
Will this immediately RAISE my scores or will it temporarily DECREASE them? If so, for how long?
Thank you.
I certainly never said that.
It will probably decrease your score, until it's paid down to 9% of the original loan, at which point it will increase your score.
@Charmante wrote:Correct. This is my first installment loan.
They gave me a 13.54% APR -- Sounds pricey. Lol
The recommended strategy was to take out a share secured loan (secured by a savings account), which has no hard pull, and a very low interest rate, and to immediately pay it down to 9% of the original loan amount.
I sure hope you didn't go through a dealership for that. You don't have bad credit, just not much credit.
That is a rip off..you can do better!
There are folks here with Bankruptcies on file, with rates half of that!
This is not to make you feel bad, but make you aware. You..can...do..better!!!
