Testing "all-zero-but-one" theory -- Never mind, dropping this experiment. Too much work.

[masscredit]

I know that it varies but what kind of increase might I see by adding a loan to my profile?

[Anonymous]

The other guys you have been talking to have more experience about the impact that adding another installment loan has on a profile with significant derogs on it.  (Such profiles have a different scorecard than those woth no negatives and therefore behave a bit differently.)

Just to recap, however, so that they can best answer your question:

• You have one current open installment loan -- a car loan.  Correct?
• You have three closed auto loans.  Correct?
• On all four car loans, you have no negatives -- no late payments, etc.  Correct?

I am basing the above on your saying that you have "... one auto loan. It's actually my forth auto loan since 2011."  (I wasn't sure whether you had any negatives on your car loans which is why I am asking.)

My guess is that, if you have four installment loans, each of which has a perfect payment history, and one of which is still open, that you will probably not get a big boost from adding yet one more installment loan.  I originally raised that option in my first post to you only because at that point it sounded like you might only have revolving accounts.  Again, the other guys will be able to advise you better about the score impact than I can.

[Revelate]

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@Anonymous wrote:

The other guys you have been talking to have more experience about the impact that adding another installment loan has on a profile with significant derogs on it.  (Such profiles have a different scorecard than those woth no negatives and therefore behave a bit differently.)

Just to recap, however, so that they can best answer your question:

• You have one current open installment loan -- a car loan.  Correct?
• You have three closed auto loans.  Correct?
• On all four car loans, you have no negatives -- no late payments, etc.  Correct?

I am basing the above on your saying that you have "... one auto loan. It's actually my forth auto loan since 2011."  (I wasn't sure whether you had any negatives on your car loans which is why I am asking.)

My guess is that, if you have four installment loans, each of which has a perfect payment history, and one of which is still open, that you will probably not get a big boost from adding yet one more installment loan.  I originally raised that option in my first post to you only because at that point it sounded like you might only have revolving accounts.  Again, the other guys will be able to advise you better about the score impact than I can.

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Oh meh, that's what I get for looking at replies, you are right CGD.

@masscredit: If you have an auto loan with DCU really depends what the current vs. original balance is on it, but short of tying up non-trivial cash for a few months there's not a lot you can do to optimize scores further.  

Probably not a lot of benefit going from 1 -> 2 open installment lines, might be some, but won't get the 20+ points I recently got from monkeying with the itty bitty and now apparently FICO pretty installment lines on my reports on FICO 8 / 98 models.  DCU is great for auto loans but can't FICO gimmick them.

Profuse apologies for my being a dumbass on this thread.

[masscredit]

I greatly appreciate all of the advice. Thank you!  

CGD - You are correct. I've had a total of 4 auto loans since 2011. One from Cap 1 and three from DCU. One is still open. No late payments. The origional balance on the current auto loan was $24,995 (didn't want to go over $25K). Current balance is $21,644. Also, no late payments on any of my current credit cards. 

I was thinking about this after my post earlier today. If another installiment loan would be worth 10-15 points then I realy should jump on it. I wouldn't have to worry about losing points if I could get it without an inquiry. I'd take a small hit on AAoA but that would come back in a few months. Might not even be enough to lower my score. And I would have the added benefit of it reporting long term. If it's only worth 3-5 points max. Then it's a maybe. I could tie up $500. - $1K for a little while. I'd quickly pay it down to just leave a few hundred dollars reporting then make smal payments monthly. 

[Anonymous]

I sense from Revelate that he's advising you at this point NOT to add a new installment loan.

Both he and I had missed the sentence where you later mentioned that you had four car loans.  I only saw it because I went back and double checked your posts.  Still, you have learned a lot of interesting stuff about how to add a real cheap installment loan if you ever need to way down the road..  So did I!  Eye opening and helpful for me as well to hear the practical stuff about specific lenders, hard and soft pulls, etc.

One piece of advice I will give you is that you seem to have a tendency to want to open more accounts.  Even after a few different people told you that you didn't need more cards you still were toying with the idea of opening more cards.  And even now that we are backtracking and telling you that the only reason we mentioned installment loans is because we thought you had NONE, you are still toying with adding another installment loan to the four you have. 

Part of that may be because there can be a rush associated with applying for new accounts.  (There's a reason people talk about app "sprees" -- it's like shooting up or buying a dozen pairs of shoes at Neiman Marcus.)  Another reason is that when we are in the credit slums, we often want people to give us some magic pill that will fix it.  "Cool -- so all I have to is open three more cards and then my credit will get better?"  Unfortunately the less glamorous truth is that we need patience -- the willingness to wait for a while while our credit sucks.  I know that from bitter experience.  Mine was a disaster and I just had to make a u-turn and then wait.  But it will eventually all fall off and you will be VERY happy when you then have several cards that are all a lot older and a few old car loans and one open car loan. 

BTW, the one thing you could in theory try is paying off a bunch of the principal on your car loan.  That will actually give your score a boost, though none of us can be certain how much.  BUT.... you should be careful here.  It's likely that you don't have 15k of spare cash just laying around.  And even if you did, I think there's lots of things that would in the long run better uses for it: putting into your 401k, your IRA, your rainy day emergency fund, etc.

Very best wishes...

[masscredit]

I'm not really in a rush to obtain new credit. I'm actually trying to avoid that so I don't take on any new inquiries and don't reduce my AAoA at all. But, if there was something that would really be worth it. Like one more card with a starting limit of over $10K or if that personal loan was going to be really benefical, then I would have gave up one inquiry (if needed) and a few months of AAoA. I'm pretty content where I am though. My scores have been gradually climbing as time goes on and my IIB accounts are falling off. Plus my credit limits have been increasing through SPs. My auto loan is at 1.74% so that is cheap money. I pretty much just pay the minimum on that each month. This whole thing has been a long road. I've learned a lot that I wish I would have known 10+ years ago. I guess I'll just sit tight, like time hear the old wounds then go from there. 

[Anonymous]

Probably a dumb idea here. But could OP inquire as to how his auto loan interest is compounded, and find out if paying 2x monthly would help? I figure if yall are advising to pay extra then why not get extra serious.

[Revelate]

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@Anonymous wrote:

Probably a dumb idea here. But could OP inquire as to how his auto loan interest is compounded, and find out if paying 2x monthly would help? I figure if yall are advising to pay extra then why not get extra serious.

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Virtually all auto loans are simple interest (run screaming from any compound interest places), paying 2x monthly in a lump sum: first half is basically a regular payment, second goes straight to principal as there's no interest left to zero out.

[SouthJamaica]

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@Anonymous wrote:

Probably a dumb idea here. But could OP inquire as to how his auto loan interest is compounded, and find out if paying 2x monthly would help? I figure if yall are advising to pay extra then why not get extra serious.

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I'm the "OP", and my post had nothing whatsoever to do with auto loans.

I guess this is an example of a hijacked thread.

This thread is supposed to be about testing the "all-zero-but-one" theory on revolving accounts.

A number of people on this forum have stated that scores are maximized by having all but one of one's revolving accounts post at zero balance, and that each small, even nominal, balance counts as a slight negative.

I am skeptical of that theory, and over the course of the month will be moving from having 10 out of 13 accounts reporting at zero to none reporting at zero, and then over the following month going back to zero balances, to see what effect if any that has on scores.

My guess is that it will have no effect, and that the all-zero-but-one theory is simply not reality based.

[Anonymous]

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@SouthJamaica wrote:

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This thread is supposed to be about testing the "all-zero-but-one" theory on revolving accounts.

A number of people on this forum have stated that scores are maximized by having all but one of one's revolving accounts post at zero balance, and that each small, even nominal, balance counts as a slight negative.

I am skeptical of that theory, and over the course of the month will be moving from having 10 out of 13 accounts reporting at zero to none reporting at zero, and then over the following month going back to zero balances, to see what effect if any that has on scores.

My guess is that it will have no effect, and that the all-zero-but-one theory is simply not reality based.

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I tested this earlier this year, but I only have 3 cards.

Not sure if you read my post here http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Utilization-Percentage-question/m-p/40924...

My file isn't clean and I don't have a lot of cards, so my results may be different from yours.  I also suspect I am at or near the top of my score card.  At the time, I wasn't willing to pay $40+ dollars each month for 3B pulls, so I only used my EQ as it was reliable on the monitoring service.  Unfortunately, I had a mortgage account where the servicing was sold in the 5th month and it completely screwed up any further testing.

The estimator found here http://www.myfico.com/Fico-Credit-Score-Range-Estimator/ asks the questions

How many cards do you have?

How many cards have balances?

There is no reason to ask the questions if they aren't part of the calculation.

Other problems with testing over a period of several months include installment balances, aging and payment history.

Often the simulator will show me an increase if I pay my bills on time for 3 months, this could counteract the small effect of an additional card with a balance.