@Anonymous wrote:The individual percentages on the loans really isn't something to worry about... like bringing one down to 9% for example. It really all has to do with your aggregate installment loan utilization.
Got it.. Thanks for hanging in here with me today. That being said.. for a Student Loan with Orig Balance $7000 and Current balance $14,000. Is that considered 100% util or 200% util.
and would you do:
4 accounts reporting balances with 3 installment account aggregate util of 50% or
3 accounts reporting balances with 2 installment account aggregate util of 25%
Starting Score: 614
@Anonymous wrote:I suppose you'd consider that individual loan at 200%, but I don't believe 200% would be any "worse" than 100% in terms of scoring if it were your only loan. As for aggregate utilization it would certainly factor in as the numerator is twice the denominator when putting together the sum of each.
I'm not really following your second question... as it would be a no-brainer to come away with both fewer accounts with a balance and lower utilization. I think perhaps you posed the question backwards and meant one less account with a balance but higher installment loan utilization? If that's the case I'd go with the 1 less account with a balance, since the utilization shift likely wouldn't impact anything due to no significant threshold crossing.
Dang, i did err in type.. The second scenario would actually be 75% util.
So 4 accounts with balance at 50% or 3 accounts with balance at 75%. Thats good to know.. lastly.. Cause Ive read this all day...I see a reason code in mortgage fico stating Proportion of Loan Balances to Loan Amounts is to high. But what I hear you saying is, since there is no threshold at 75% or 50% then it is what it is, unless I paid it down to a threshold of aggregate <8.9%.
@UpAndComing74 wrote:
@SouthJamaica wrote:
@UpAndComing74 wrote:
@SouthJamaica wrote:
@ibebarrett wrote:So I know there are thresholds for different util % of loans, but is that overall or each account?
I have 5 student loans all at between 90 and 97%, ranging from 1k to 3.5k in original principal balance. Would it help more to just work down the total or take both 1k loans down to around $100 thenfocus on bringing down the big ones?
I'm on REPAYE so I would be able to keep the small ones at ~8.9% for almost another year until me new payment plan updates.
Thanks!
1. It's overall.
2. It's best not to pay down to zero if you can help it, because once it gets to zero then you lose that loan from the denominator.
Example:
Starting point:
Let's say you have 5 loans average 2500 each for total 12,500; already paid down to 2000 each; installment utilization percentage is 10,000/12,5000 = 80%.
Now you have a total of $2000 available to pay towards the loans.
Example A: Pay off 1 loan, percentage is now 8,000/10,000 = 80%
Example B: Pay $400 towards each of the 5 loans, percentage is now 8,000/12,500 = 64%
BTW
(a) this overall installment loan utilization percentage is a big deal in FICO 8's and 9's, not so much in the older mortgage scores, which often do not react at all
(b) even in FICO 8's and 9's you don't get any really big score gains until you get down to 9% or thereabouts.
Question please. I have $13K reserves to pay on my Auto Loan below to maximize my Mortgage FICO scores.
1. Do Student loans factor into Installment util for the threshold percentages. I currently have 3 Student loans and 2 Auto Loans.. Using whole numbers the breakdown of Owe/Original Balance is:
SL-7000/13000-(Interest has it upside down)
SL-1100/1750---37%
SL-1700/2600--35%
Auto-800/18000-95%
Auto-21000/39000-45%
2. Can you confirm that FICO 2,4,5 do not care about Installment Balances? I could save my $$ and use it for the new house.
I am currently at a midscore of 712 and I am trying to push it to 720. Credit pull is next month. Closing is August 2021.
1. Yes, student loans factor in.
2. FICO 2, 4, and 5 care less, but they do sometimes move. E.g. I have detected slight movement in my FICO 4, while @Revelate has detected slight movement in his FICO 2.
BTW, in closing out loans, there may be factors other than utilization percentages at play. E.g., I believe a recent 11 point gain in my EX FICO 2 may have been attributable to my closing out 2 of my 6 open loans. Utilization percentage wasn't a factor because all 6 were at low utilization. But the algorithm may have been rewarding me for reducing the number of accounts with a balance.
Nice! So what I may do then is take my 6 down to 4. I can pay off 2 small ones and bring one down to 9%. Then I would have one with 9%, one with 63% and 1 with 100%. (The other is a revolver with a small balance) That would bring my util of installment loans to 48% remaining. Question is on a student loan that is reporting a Balance almost twice the Original amount...is that calculated as 100% util or 200% util.
As @Anonymous points out, individual utilization isn't a factor in installment loans. It's aggregate utilization that counts.
But more concerning to me is that you seem to be mixing revolvers and loans together; they are 2 completely separate subjects.
The only important number for you to focus on in installment utilization percentage is 9% or less of the total original loan amounts. If you can get to that number, you're in the sweet spot in FICO 8 and 9 scores. Which can be a good reason to hold on to mostly-paid-off loans and pay them down instead of paying them off.
In my case each of my 6 open loans was already at 9% or less, so there was no harm -- from a utilization percentage standpoint -- in paying them off.
@SouthJamaica wrote:
@UpAndComing74 wrote:
@SouthJamaica wrote:
@UpAndComing74 wrote:
@SouthJamaica wrote:
@ibebarrett wrote:So I know there are thresholds for different util % of loans, but is that overall or each account?
I have 5 student loans all at between 90 and 97%, ranging from 1k to 3.5k in original principal balance. Would it help more to just work down the total or take both 1k loans down to around $100 thenfocus on bringing down the big ones?
I'm on REPAYE so I would be able to keep the small ones at ~8.9% for almost another year until me new payment plan updates.
Thanks!
1. It's overall.
2. It's best not to pay down to zero if you can help it, because once it gets to zero then you lose that loan from the denominator.
Example:
Starting point:
Let's say you have 5 loans average 2500 each for total 12,500; already paid down to 2000 each; installment utilization percentage is 10,000/12,5000 = 80%.
Now you have a total of $2000 available to pay towards the loans.
Example A: Pay off 1 loan, percentage is now 8,000/10,000 = 80%
Example B: Pay $400 towards each of the 5 loans, percentage is now 8,000/12,500 = 64%
BTW
(a) this overall installment loan utilization percentage is a big deal in FICO 8's and 9's, not so much in the older mortgage scores, which often do not react at all
(b) even in FICO 8's and 9's you don't get any really big score gains until you get down to 9% or thereabouts.
Question please. I have $13K reserves to pay on my Auto Loan below to maximize my Mortgage FICO scores.
1. Do Student loans factor into Installment util for the threshold percentages. I currently have 3 Student loans and 2 Auto Loans.. Using whole numbers the breakdown of Owe/Original Balance is:
SL-7000/13000-(Interest has it upside down)
SL-1100/1750---37%
SL-1700/2600--35%
Auto-800/18000-95%
Auto-21000/39000-45%
2. Can you confirm that FICO 2,4,5 do not care about Installment Balances? I could save my $$ and use it for the new house.
I am currently at a midscore of 712 and I am trying to push it to 720. Credit pull is next month. Closing is August 2021.
1. Yes, student loans factor in.
2. FICO 2, 4, and 5 care less, but they do sometimes move. E.g. I have detected slight movement in my FICO 4, while @Revelate has detected slight movement in his FICO 2.
BTW, in closing out loans, there may be factors other than utilization percentages at play. E.g., I believe a recent 11 point gain in my EX FICO 2 may have been attributable to my closing out 2 of my 6 open loans. Utilization percentage wasn't a factor because all 6 were at low utilization. But the algorithm may have been rewarding me for reducing the number of accounts with a balance.
Nice! So what I may do then is take my 6 down to 4. I can pay off 2 small ones and bring one down to 9%. Then I would have one with 9%, one with 63% and 1 with 100%. (The other is a revolver with a small balance) That would bring my util of installment loans to 48% remaining. Question is on a student loan that is reporting a Balance almost twice the Original amount...is that calculated as 100% util or 200% util.
As @Anonymous points out, individual utilization isn't a factor in installment loans. It's aggregate utilization that counts.
But more concerning to me is that you seem to be mixing revolvers and loans together; they are 2 completely separate subjects.
The only important number for you to focus on in installment utilization percentage is 9% or less of the total original loan amounts. If you can get to that number, you're in the sweet spot in FICO 8 and 9 scores. Which can be a good reason to hold on to mostly-paid-off loans and pay them down instead of paying them off.
In my case each of my 6 open loans was already at 9% or less, so there was no harm -- from a utilization percentage standpoint -- in paying them off.
Ahh ok. So even though it says 6 accounts reporting a balance. One being a revolver..I am not to include the AZEO revolver in this mix?
All my installments combined (aggregate) or $70,000. I would have to bring that down to $6300 combined to get the 9%. My current aggregate util is 46% with 5 loans showing balance. I can bring it to 2 loans showing a balance and aggregate util will be 60% which both of those are a far cry from 9%.
