"Your open auto account balances are too high compared to their loan amounts"

[babbles]

My score is over 700 anyway but why would this be a factor when my original balance was $31897 and curent balance and only auto balance is $8465, how is this still a factor?  That's about 26% or so utilization.

Also,

I am at the very end of 5 year installment loans with two different institutions (20k each), I guess there's nothing I really can do to hold those accounts open with about  $1 or so just so my score dosen't dramatically drop??  

[Anonymous]

Hi Babbles.  Would you mind listing all of your installment accounts, with the current amount and original loan amount?  Note that some other things aside from loans are classified as installment, e.g. auto leases, financing for furniture at Rooms To Go, etc.

Loan 1.  Current balance = _______   Original Amount = _______

Loan 2.  Current balance = _______   Original Amount = _______

Loan 3.  Current balance = _______   Original Amount = _______

etc.

Once we get a better sense of your entire loan situation we can advise you better.

I see that you put that reason statement in quotes.  Is that the exact wording?  What scoring model did it appear for?  (e.g. FICO 8 Classic, FICO 9 Auto, etc.)  What was the source of your score and the negative reason statement?  (Credit Check Total, myFICO Ultimate 3B, Amex Credit card, etc.)

[Anonymous]

PS.  It would also help it you could let us know when you expect each loan to end its full term (assuming you keep them open the full term).

[Anonymous]

Hey there Babbles,

Negative reason statements don't necessarily mean that your scores are being majorly held back by whatever they are telling you, simply that it's an area of opportunity that's holding you back at least 1 point.  We have seen people receive negative reason statements for things that are only hurting their score 1-5 points. 

When it comes to installment loans, maximum score is achieved when the loan is paid down to 8.9% or less of the original balance.  This means that anyone with a 9% or greater B/L ratio could in theory see that negative reason code.  Many people like SJ on this forum have reported gaining around 15 points or so for crossing that threshold on aggregate installment loan utilization.  If your aggregate installment loan utilization is > 8.9% which it sounds like it is, I would say that's the reason you're seeing the statement you posted about.

[babbles]

Sorry for the delay. That is exact wording.

Loan 1 original 20k 2013. balance $869
Loan 2. “. “. “. “. $988
Auto 3. “. 31869 “. “. $8465
2013 was a busy year, I think it was the score advantage from chase.
Thanks!

[Anonymous]

Hi Babbles.  I think you may have missed my last post.  I wrote:

PS.  It would also help it you could let us know when you expect each loan to end its full term (assuming you keep them open the full term).

Basically a month/year when you estimate that the loan would reach its full term.

[babbles]

Yes sorry I missed it, full term would be June and July 2018 would be full term for #1&2 installments.

[Anonymous]

Great.  And what about the car loan?  When will it reach its full term?

[babbles]

couldn't get the exact amount till I got home, Feb 2019.

[Anonymous]

The "B/L ratio" that Brutal Body Shots mentioned earlier is calculated across all your open loans taken together. It's also called "installment utilization."  It is a lot like credit card utilization, but it applies solely to installment debt, rather than revolving debt.

That factor measures how much of your existing open installment debt you have paid off.  Here's how it works.  You take all your current open installment loans (only the open ones -- ignoring all closed loans).  You then add up all the amount you currently owe.  Call that CURRENT.  Then you add up the amounts that the loans were originally for.  Call that ORIGINAL.  Then you divide CURRENT by ORIGINAL and you get a percent.  (Do you see how that is a lot like the credit card utilization calculation?)  When that % is close to 100, or if you don't have any open loans at all, then you get no FICO points from this factor.  But when the % is very low (say 1-9%) then you get most or all of the points from this factor.

Your total installment util is over 11% right now.  By May of this year it might well be under 8.99% and there would no longer be any scoring penalty.  But as those big 20k loans get paid off, they get removed from the denominator of the util calculation.  (Remember, I said that the util calculation looks only at open loans.)  So by Aug your installment util will be back up in the 20 percent range (since only the car loan will count) and you will get a minor score hit again.