Will doubling payments on installment loan increase my Fico 542?

[Anonymous]

I have an educational/installment loan with balance of 2200$. It was 120 days late in Dec but I’ve caught up. Payments are 40$/month. If I double my payments each month will that improve my mortgage version Fico? I know I’ll save on interest but my goal is to increase Fico for a mortgage.The other installment accounts I have are a car note, a condo mortgage, and another student loan with a balance of 18000 that is in deferment. The rest of my accounts are credit cards with very low utilization.

[Kree]

A small portion of your score is directly related to the percentage of remaining balances on installment accounts.  Double payments might help you pass a new threshold and increase your score, but I would only expect it to increase by a few points.  (note I'm better versed in FICO8, points if any might differ in the mortgage scores.) Also, the remaining balance might be a aggregate of all accounts and not individual, or it might score for both.

[iv]

The effect of that 120-day late will swamp any tiny effect from having a lower balance % on the single small loan (especially with a larger one in deferment, and a mortgage...)

Have you tried getting the 120-day removed or reduced with a goodwill letter? Do you have any other negative items you could address?

[Anonymous]

Great comment by iv.  The negatives are overwhelmingly the thing you want to work on.

As far as your credit cards, it sounds like it is possible that several of them are reporting a small positive balance.  If so, that will hurt your mortgage scores.  You want exactly one to report a small positive balance and all other cards to report $0.  This is an issue different from utilization -- it's making sure that most open accounts are reporting $0.

[Anonymous]

A 120D late is a major derogatory which can affect an otherwise perfect profile for as much as 120 points for the first 5 years after the late and as much as 90 points for years 6 and 7 after the late.

If your profile isn't well aged (8+ years oldest account), you're going to be stuck in the 500s-600s for sure.

Going for a mortgage with a late that recently is a bad financial decision because you're going to pay so much in higher interest for 30 years that you'll regret it.  Do you have to be on the loan?

[Anonymous]

While I may completely off on this, I believe that the OP is speaking about making double payments and raising his FICO score outside of any utilization consideration.  I get the impression that he's asking if by making double payments that "good look" is worth more FICO points.  It's important for him to understand (if that's the case) that the double payments will not result in more FICO points simply because you're making double payments.

[SouthJamaica]

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@Anonymouswrote:
I have an educational/installment loan with balance of 2200$. It was 120 days late in Dec but I’ve caught up. Payments are 40$/month. If I double my payments each month will that improve my mortgage version Fico? I know I’ll save on interest but my goal is to increase Fico for a mortgage.The other installment accounts I have are a car note, a condo mortgage, and another student loan with a balance of 18000 that is in deferment. The rest of my accounts are credit cards with very low utilization.

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1. It couldn't hurt.

2. Reducing overall installment percentage utilization will definitely help FICO 8, and will probably help 1 or more of the mortgage versions.

[Anonymous]

Hey there SJ,

While it's true that a lower utilization percentage on installment loans can raise your score, it's important that the OP understand that it's not a directly proportional relationship and that it all has to do with the crossing of thresholds, not simply X dollars = X score gain, 2X = 2X score gain, etc.