You get the most points once your aggregate utilization is under 9%. There's no regular utilization thresholds like revolving accounts.
@mster wrote:I have 4 separate student loans reporting and am curious about a strategy for paying them down that would maximally boost my FICO scores. Obviously this isn't the first concern when determining how to pay back loans, but it could definitely factor in.
Loan utilization / percent of original balance for the 4 loans is roughly 75/80/95/100.
So would I get a bigger boost from paying down 1 loan aggressively and massively dropping utilization on that loan (say 75/80/95/100 to 35/80/95/100), spreading the payments around showing progress paying down balances on multiple loans (75/80/95/100 to 65/70/85/90), focusing on paying down the smallest loans first for the biggest util drop relative to total payment amounts or focus on bringing the highest utilization loans down in case there's some kind of score penalty for lack of significant downward movement below 100?
I don't believe it will make a difference, in terms of installment utilization, because the only clearly delineated breakpoint of which I am aware is 9% aggregate installment utilization.
You might possibly pick up a few points by losing an "account with balance"; to shoot for that I guess you should pay off the one with the smallest balance.
Probably the best thing is to just play the "economics" card, and concentrate on the loan with the highest interest rate.
@mster wrote:
@OmarGB9 wrote:You get the most points once your aggregate utilization is under 9%. There's no regular utilization thresholds like revolving accounts.
I put together a quick spreadsheet using my original balances, current reported balances and the FICO score simulator numbers. The main break points (aggregate utilization) for FICO boosts going by the FICO score simulator numbers are 87% util, 80%, 74% and 63%.
Technically max boost is aggregate utilization < 10% (as expected), but after paying things down to hit that 63% tier above further gains get a lot more incremental.
Unsure how the FICO simulator is distributing the payment amount entered across loans so not completely clear if the boosts are being triggered by crossing break points in aggregate utilization or crossing break points on the individual loan balances...
Based on numerous DPs on here, the breakpoints are 88.9%, 68.9%, 48.9%, 28.9%, and 8.9%, but those only apply to revolving accounts, not installment loans.
FICO simulators are not accurate, I wouldn't listen to them at all.
@mster wrote:
@OmarGB9 wrote:Based on numerous DPs on here, the breakpoints are 88.9%, 68.9%, 48.9%, 28.9%, and 8.9%, but those only apply to revolving accounts, not installment loans.
FICO simulators are not accurate, I wouldn't listen to them at all.
Definitely not treating the FICO calculator results as reliable. Just wanted to roughly ballpark things like max score boost (+70 points split between 3x bureaus at <10% aggregate util), most efficient score boost to net payment ratio (2/3 of the max boost kicks in for paying aggregate utilization down to ~63%) and min until drop for any kind of boost (92% to 87%). Again, I understand the calculator isn't reliable but it does seem to be accurate enough to give a very rough idea of how score boost will scale with payments / drops in aggregate util.
Two of the four loans are smaller and higher interest - would I be likely to get a bigger boost from paying them off completely or just dropping them to < 10% (or < 8.9%) util and letting them age?
I think FICO scoring treats student loans like regular loans such as mortgage or auto (for the most part). It seems FICO lumps all student loans together (and may actually lump them with other loans as well) for an aggregate UTI % and scores are adjusted based on that aggregate % and not individual UTI like on revolving accounts. So by paying off any of those loans will most likely cause the aggregate UTI % to increase on the remaining open loans and possibly DROP your FICO score.
As always, finances over FICO for most situations. There may be a short term goal that could cause you to leave a loan open and delay paying it off for a few months if you are going for a mortgage (that extra score boost may help get a better mortgage rate).
@mster wrote:
@OmarGB9 wrote:Based on numerous DPs on here, the breakpoints are 88.9%, 68.9%, 48.9%, 28.9%, and 8.9%, but those only apply to revolving accounts, not installment loans.
FICO simulators are not accurate, I wouldn't listen to them at all.
Definitely not treating the FICO calculator results as reliable. Just wanted to roughly ballpark things like max score boost (+70 points split between 3x bureaus at <10% aggregate util), most efficient score boost to net payment ratio (2/3 of the max boost kicks in for paying aggregate utilization down to ~63%) and min until drop for any kind of boost (92% to 87%). Again, I understand the calculator isn't reliable but it does seem to be accurate enough to give a very rough idea of how score boost will scale with payments / drops in aggregate util.
Two of the four loans are smaller and higher interest - would I be likely to get a bigger boost from paying them off completely or just dropping them to < 10% (or < 8.9%) util and letting them age?
There are no known break points in installment utilization percentage other than 9%. And that breakpoint is for aggregate utilization, not individual account utilization. So the answer is no.
@SouthJamaica wrote:
@mster wrote:
@OmarGB9 wrote:Based on numerous DPs on here, the breakpoints are 88.9%, 68.9%, 48.9%, 28.9%, and 8.9%, but those only apply to revolving accounts, not installment loans.
FICO simulators are not accurate, I wouldn't listen to them at all.
Definitely not treating the FICO calculator results as reliable. Just wanted to roughly ballpark things like max score boost (+70 points split between 3x bureaus at <10% aggregate util), most efficient score boost to net payment ratio (2/3 of the max boost kicks in for paying aggregate utilization down to ~63%) and min until drop for any kind of boost (92% to 87%). Again, I understand the calculator isn't reliable but it does seem to be accurate enough to give a very rough idea of how score boost will scale with payments / drops in aggregate util.
Two of the four loans are smaller and higher interest - would I be likely to get a bigger boost from paying them off completely or just dropping them to < 10% (or < 8.9%) util and letting them age?
There are no known break points in installment utilization percentage other than 9%. And that breakpoint is for aggregate utilization, not individual account utilization. So the answer is no.
That's the point I've been trying to make @mster.