@jamie123 wrote:
@Revelate wrote:
@jamie123 wrote:
Now, I think this is how you need to play this reindeer game: (Revelate are you listening?)
You have these two secured loans and it seems like they hardly drag your scores down much at the front of the loan so you can just let them ride until you need your absolute best score because a lower interest rate on a big purchase like an auto or mortgage could save you hundereds or thousands of dollars. As these loans mature they should start adding points to your scores. When you are a month or two out from apping for an auto loan or mortgage you pay the balance down so you only have about 4 or 5 months left on the loan. This should give you the most points these loans are capable of giving you. They will still be open at your time of application and closing which is a good thing. Their combined payments of about $33 per month doesn't really do anything to your DTI which is a good thing. If you were applying for a mortgage and had an auto loan with a monthly payment of say $400, that $400 comes off the monthly mortgage you could be approved for. Well, at least those are my thoughts.
Hahaha, love the reference!
The only place I'd quibble on is this: we don't know what breakpoints are for installment loan balance and I'm honestly not convinced there's one to begin with based on my own anecdotal experience. I've been paying on my auto and original secured installment loan extensively over the past two years to where they're both paid off soon (next month for auto, december for USAA secured) and my Beacon 5.0, a common mortgage score, has been flatlined basically for a year and a half other than a known AAOA change and purposeful balance testing: as a result, I really, truly doubt there's a breakpoint with 4-5 payments left and I find the people online who are stating there's one at 70% while at least plausible, somewhat unlikely as well.
Knowing what I do regarding FICO and apparent tradeline scoring, I'd extend those as long as possible, and only pay them off if you need to in order to clear space for the DTI calculation you reference: otherwise, keep that tradeline open as long as you can if it's a trivial financial cost (and it should be before anyone engages in these reindeer games!).
The whole remaining balances thing, frankly take the "reasons your score ain't higher" with a grain of salt: the first two are the most important, and the rest is just junk they won't get sued over in my estimation which while sometimes relevant, might as well be there for entertainment value in comparison.
Yeah, I agree with you on keeping them open as long as possible.
I'm just saying that we don't really know much about how installment loans are scored but I can't imagine them offering any higher score benefit than they ever would once they are into the last 6 months of the term. I also think that there may be many subtle breakpoints throughout the first one-half of the term that gets covered up by the rest of the noise on a report making it difficult to determine that a 1 or 2 point change in score was caused by the installment loan. Most people would just write off a 1 point increase per month as noise. A 1 point increase over 48 months would be 48 points! Now, I know an installment loan isn't worth 48 points but what if it was worth 30 points over 4 years? That would only be a change of 5/8 of a point per month which nobody would notice.
I do see people dropping 20 points when they pay off an installment loan and wonder just where those points came from. I'm also pretty sure that those 20 points don't represent the entire points earned by having the installment loan in the first place but that some points are retained in the score. What leads me to this reasoning is that you NEVER hear anybody stating that they have 50% of their auto loan paid off and saw a 5 point boost! I think the point gain is slooooow and over a loooong term.
We do see all over the internet that a mix of credit is worth 10% of your score, whatever that means. We also see (Like I did.) "Lack of installment loans." as a reason my scores are held down.
The highlighted is a fair point, and there's a non-zero chance that my not seeing incremental score changes was because I was almost assuredly flatlined against a bucket boundary, a clean sheet might see differently.
I admittedly have some confusion in terminology: if mix of credit only refers to open tradelines (and it might) that 20 points for a gold plated person isn't unreasonable: when I was a thin file when my auto loan hit in Jan I went from 595 to 608 when my second installment loan reported: everything was 5 months or newer at that point so don't think I hit much anywhere and still had a slew of inquiries from December so I take it as a reasonable datapoint, and everything is scaled higher in the pretty brackets when we're talking people with scores 200ish points above that mark: any negative is going to be treated more harshly, and since this calculation is instant in time apparently, I'm really starting to think the default advice should simply be around minimum open tradelines for optimal scoring:
2 open revolving + 2 open installment, and really it should be 3 open revolving to play the aforementioned reindeer games with your reported balances. That covers both mix of credit and open reported tradelines if there's any difference between the two, though a glaring exception I know of is auto enhanced scoring where people with old closed auto loans, didn't get smacked with the first time buyer penalty according to F&I people's anecdotal reports so maybe they are seperate as I've assumed.
As to whether there's breakpoints, maybe, probably even, but it's comparitively minor with looked at vs. open tradelines. As a result I wouldn't get too caught up in the remainder of balances on an installment loan as it's apparently not substantially important as I think if there is a breakpoint, it's way higher than 6 months left, likely even on a one year loan, and as stated I didn't lose a single point with my new secured loan reporting, it might be aggregate, or there may be a balance level, but it doesn't appear an instrinsic penalty on an installment tradeline to have it report 100% at least in my case anecdotally.
@gen-specific wrote:
@gen-specific wrote:my score is 700 today, opening one gets me to 770? lol thats a 10% increase after all
can you tell me more about how that works
@Anonymous DUDE @Revelate IT WORKED
My Alliant CU is reporting and my Credit Karma Transunion score is 764 now, up from 700 two months ago
I just jumped from "see what happened was, oh ignore that it won't happen" credit score to having an awesome score!
what's next? Getting a second line or just doing nothing... I want at least 780 just for some wiggle room if I decide to do some inquiries
Fantastic!
I would check a FICO Score for giggles before doing anything else honestly; I'm actually surprised to see a bump that high on Credit Karma.
We've been doing some testing lately and there's some debate as to how many are really necessary: it's nearly undisputable that the first one is the most important, the second is smaller, and there may be something out at 3 / 4 too though I haven't seen that with my experience and my dirty bucket, some folks have seen differently in their own data. I know I'm sticking with a minimum of 2 open installment lines until I see differently from some other folks testing similar things lately.
Regardless, nicely done senor!
That is an very interesting note that an installment loan would that make that much of an difference right now i think i have hit ceiling with my scores, i am wondering if adding an secured loan like that would help an whole lot.
@gen-specific wrote:
@Ubuntu wrote:Wow, that's staggering! Congrats. Did anything else happen recently? With your tradelines and limits I'm really surprised anything could move you score 60 points unless a BK or some derogs fell off at the same time.
Maybe it's just something to do with Credit Karma's scoring system. I'd be very interested to see an actual FICO.
right I'm a little skeptical and I have another service which will show Transunion scores
but everything I read on Credit Karma says those are actual Transunion Scores
and my Credit Karma VantageScore FAKO is at 900 out of 950
so for all intents and purposes I have a decent enough view of my credit worthiness
for reference, 8 months ago one late payment on one card I'm simply a guarantor on had dropped my scores from 750 to around 680. Between then and now, some old inquiries dropped off, and I did these other things so it worked
also, the CFPB did mention that they're going to force scores to no longer count late payments on things that are still being paid. Like issued that are resolved shouldn't hurt your credit anymore. so maybe that helped? I don't know if thats been implemented yet.
Credit Karma's base score should be ignored: it's a Transunion, effectively educational score. The VS 2.0 on CK is a legit one though in my book, and 900/950 is a very nice score.
Where was this regarding late payments not being counted? I saw paid collections being excluded in FICO 9, but nothing about other tradelines, or released tax liens, or similar tidbits. Not certain how either as someone who's had late payments in the past, is probably more likely to have late payments in the future than someone who's had a clean sheet statistically? Individuals of course will vary, but overall suspect that's a reasonable assertion.