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Konrad & Mindy's Installment Loan Hack Revisited


PotO
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Every few years I use a modified version of the Konrad & Mindy Installment Loan Hack to push my scores up from around 820 to 850 and then ride it out for a few years or until I get bored seeing a $200 loan balance on my spreadsheet.  This latest one from USAA I foolishly paid off about two years too early and my scores all dropped around 30 points taking me out of my usual cheery mood.

 

I just applied for another USAA loan and for some reason it is never an instant approval.  I have to call in and they put me on hold while referring the application to an underwriter.  This time, however, the underwriter said that they need a couple of days to process the application.  Not one for delayed gratification, I hung up and called Navy.  My original goal in calling was to collect data to ensure that the loan hack would work, but I decided to apply while on the phone.  Instant approval and the money was in my checking account while still on the phone with the CSR.  I'll wait a week or so and then pay the loan down to a $200 balance and ride it out for a few years.

 

Now the problem is that a couple of hours after getting things squared away with Navy, USAA decided to approve my application.  

 

So ...

 

1.  Will having a second loan reporting ruin the hack if one is at 9% and the other > 9%?

2.  What about if both are < 9%?  Will the hack still work?  

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This should be interesting.

I think it won't matter because both loans will be 90% paid.

Also if I may ask, do you have an open mortgage and or car loan.

 

I am only asking because I wonder if I did this if it would have any effect on my scores.

TU 728 FICO 8, 767 FICO 9

EQ 764 FICO 9, FICO 8 730

 

I am sort of interested to see how my FICO 4/5 mortgage scores will take a new account especially a loan.

 

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4 hours ago, althes said:

This should be interesting.

I think it won't matter because both loans will be 90% paid.

Also if I may ask, do you have an open mortgage and or car loan.

 

I am only asking because I wonder if I did this if it would have any effect on my scores.

TU 728 FICO 8, 767 FICO 9

EQ 764 FICO 9, FICO 8 730

 

I am sort of interested to see how my FICO 4/5 mortgage scores will take a new account especially a loan.

 


My mortgages were paid and dropped off quite a while ago.  No car loans.  I seem to recall from Konrad's loan hack thread that this will not work if you have an open mortgage or car loan, but I am not sure.  
 

I'm not sure what the effects of a new loan account (or 2) will have on my scores, but I'll post that when I see the results.  Right now I can show score results after the loan reported closed.  By the way, these are all from Experian data.

 

FICO Score 2:  + 17 points

FICO Auto Score 2:  + 16 points

FICO Auto Score 8:  - 44 points

FICO Bankcard Score 2:  + 18 points

FICO Bankcard Score 8:  - 50 points

FICO Bankcard Score 3:  - 31 points
 

These scores were compared two days before the loan reporting closed with one day after.  The only other changes to my report during this time period were going from one single account on my report showing a balance of $5 to that account now showing $0, but a different account going from $0 to $3,002.  Limits are high so that $3k is only 6% utilization on that one card and less than 1% global.  
 

The $2 Trick never works for me.  I only get the $2k Trick.  When I get one account showing approximately $2,000, I get a score increase. 

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44 minutes ago, hdporter said:

To each their own ... but I generally expect I'll continue to seek out more interesting pastimes than "score hacking" so long as my FICO's remain at 760+.

 

If people didn't test the limits, we wouldn't need a CB. ;)

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On 11/11/2019 at 4:22 PM, PotO said:


My mortgages were paid and dropped off quite a while ago.  No car loans.  I seem to recall from Konrad's loan hack thread that this will not work if you have an open mortgage or car loan, but I am not sure.  
 

 

 

I did recently see a statement to the effect "no open non-mortgage installment loans" in regards to FICO comments on items hurting credit score. It was on one or two of the Fico versions. I can't remember which one(s) but I think FICO 4 was one of them.

 

This goes against the previously accepted wisdom in which any one installment loan, mortgage included, was all that was necessary to increase scores.

Edited by DigDeep
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2 hours ago, DigDeep said:

 

I did recently see a statement to the effect "no open non-mortgage installment loans" in regards to FICO comments on items hurting credit score. It was on one or two of the Fico versions. I can't remember which one(s) but I think FICO 4 was one of them.

 

This goes against the previously accepted wisdom in which any one installment loan, mortgage included, was all that was necessary to increase scores.

 

You seem to be confused.

 

I've seen "lack of recent installment loan history" -- or words to that effect -- as negative factors in certain FICO scores, but I don't remember which ones exactly.  In any event, it's not remotely connected to what we are discussing.  What we are discussing is the "Installment Loan Hack / Trick" that has been documented to work only with certain versions of FICO scores.  Amongst the versions where it doesn't work are:

 

FICO Score 2; 

FICO Auto Score 2; and

FICO Bankcard Score 2.

 

You only have the conventional wisdom half right.  In those versions of FICO scoring where the Installment Loan Hack / Trick does work, any one installment loan / mortgage will work as long as it is paid down to approximately 85% of it's original loan amount.  Once completely paid off, the score increase virtually disappears.  Not sure how many Einsteins would take out a mortgage just for the purpose of getting an approximately 30 point FICO Score increase after 24.5 years, but I'm sure we can find hundreds of them over at myFUCO or Redsh!t.  

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As I mentioned before, unfortunately, I need an Alliant hack to pushed and increase the FICO 8 by 30 points, and the window of opportunity has been closed before I have the chance to apply. 

 

My current FICO score is the same as a year ago, and there is almost no change. I think many people are like me. The score is divided into five parts, each of which determines its importance and influence. Therefore, when we get the highest scores in 4 of the 5 categories, the average age of the accounts is a single component that takes time to reach the highest effects on the score. Even if you acquired a long-standing bank accounts history (any kind of loans) on your credit reports once the account is paid-off and closed and runs it course it will eventually drop off and disappeared in your credit reports. This is exactly what happened to me. No matter what type of loan, installment, mortgage, revolving turnaround or whatnots. Therefore, in the past two years, I have been steadily between 780 and 805 without installment payments.

 

Finally, as most credit experts will tell you, the FICO score remains above 760, which will give you the highest interest rate, just as someone gets an 820 FICO score, right?

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24 minutes ago, MP80 said:

As I mentioned before, unfortunately, I need an Alliant hack to pushed and increase the FICO 8 by 30 points, and the window of opportunity has been closed before I have the chance to apply. 

 

My current FICO score is the same as a year ago, and there is almost no change. I think many people are like me. The score is divided into five parts, each of which determines its importance and influence. Therefore, when we get the highest scores in 4 of the 5 categories, the average age of the accounts is a single component that takes time to reach the highest effects on the score. Even if you acquired a long-standing bank accounts history (any kind of loans) on your credit reports once the account is paid-off and closed and runs it course it will eventually drop off and disappeared in your credit reports. This is exactly what happened to me. No matter what type of loan, installment, mortgage, revolving turnaround or whatnots. Therefore, in the past two years, I have been steadily between 780 and 805 without installment payments.

 

Finally, as most credit experts will tell you, the FICO score remains above 760, which will give you the highest interest rate, just as someone gets an 820 FICO score, right?


It doesn't have to be Alliant.  There are other lenders.

 

760 might get you the best rates for a mortgage, but that's not always the case with other types of loans and credit cards. 

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11 hours ago, DigDeep said:

 

I did recently see a statement to the effect "no open non-mortgage installment loans" in regards to FICO comments on items hurting credit score. It was on one or two of the Fico versions. I can't remember which one(s) but I think FICO 4 was one of them.

 

This goes against the previously accepted wisdom in which any one installment loan, mortgage included, was all that was necessary to increase scores.

 

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7 hours ago, Kat58 said:

 


For the record, FICO Score 9 now shows on my EX "lack of recent installment loan" as a negative factor after my loan had been closed only a couple of days.  
 

The corresponding score drop was in keeping with the Installment Loan Hack guidelines.  

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1 hour ago, hegemony said:

keep in mind the reason narratives given to a consumer do not match the verbal rationale provided to creditors. There are only a couple dozen consumer narratives and a couple hundred for creditors.

 

Precisely!

 

BTW, where can we find the narratives given to creditors?

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On 11/11/2019 at 11:38 AM, althes said:

This should be interesting.

I think it won't matter because both loans will be 90% paid.

Also if I may ask, do you have an open mortgage and or car loan.

 

I am only asking because I wonder if I did this if it would have any effect on my scores.

TU 728 FICO 8, 767 FICO 9

EQ 764 FICO 9, FICO 8 730

 

I am sort of interested to see how my FICO 4/5 mortgage scores will take a new account especially a loan.

 

 

No confusion here other than not realizing the new board does not carry over quoted material inside a post into the new quote.

 

I responded to your post and the omitted quote of althes within your post, which I posted above. My comment directly pertains to althes question.

 

Further, Konrad's loan hack thread you referenced directly states if you have a mortgage, the installment loan hack does not work and no points can be added. I merely presented information directly stated from FICO themselves, never before discussed on CB, which seems to contradict the current view of how the installment hack works for at least one FICO scoring model.

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3 hours ago, DigDeep said:

 

No confusion here other than not realizing the new board does not carry over quoted material inside a post into the new quote.

 

I responded to your post and the omitted quote of althes within your post, which I posted above. My comment directly pertains to althes question.

 

Further, Konrad's loan hack thread you referenced directly states if you have a mortgage, the installment loan hack does not work and no points can be added. I merely presented information directly stated from FICO themselves, never before discussed on CB, which seems to contradict the current view of how the installment hack works for at least one FICO scoring model.


Jethro, keep to third grade.  
 

1.  No mortgage?  The Installment Loan Hack works.

2.  Mortgage?  Balance greater than approximately 15% of original balance?  Hack fails.

3.  Mortgage?  Balance less than approximately 15%?  You already have the Hack.  


FICO Score 9 also has "no recent installment loans / mortgages" as a negative factor.  The Hack definitely does work with FICO Score 9.  

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  • 3 months later...
On 11/11/2019 at 8:22 PM, PotO said:


My mortgages were paid and dropped off quite a while ago.  No car loans.  I seem to recall from Konrad's loan hack thread that this will not work if you have an open mortgage or car loan, but I am not sure.  
 

I'm not sure what the effects of a new loan account (or 2) will have on my scores, but I'll post that when I see the results.  Right now I can show score results after the loan reported closed.  By the way, these are all from Experian data.

 

FICO Score 2:  + 17 points

FICO Auto Score 2:  + 16 points

FICO Auto Score 8:  - 44 points

FICO Bankcard Score 2:  + 18 points

FICO Bankcard Score 8:  - 50 points

FICO Bankcard Score 3:  - 31 points
 

These scores were compared two days before the loan reporting closed with one day after.  The only other changes to my report during this time period were going from one single account on my report showing a balance of $5 to that account now showing $0, but a different account going from $0 to $3,002.  Limits are high so that $3k is only 6% utilization on that one card and less than 1% global.  
 

The $2 Trick never works for me.  I only get the $2k Trick.  When I get one account showing approximately $2,000, I get a score increase. 

Did the hack work? 

I'm thinking of opening a secured NFCU loan to hopefully help my credit score since my file is thin with no installment credit. 

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5 hours ago, Theirmomma said:

Did the hack work? 

I'm thinking of opening a secured NFCU loan to hopefully help my credit score since my file is thin with no installment credit. 


Yes, it worked.  I paid off the loan and scores generally dropped.  I opened up another one and scores increased from 810 to 840.   
 

A lot depends on which FICO Score you measure.  

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5 hours ago, Theirmomma said:

Did the hack work? 

I'm thinking of opening a secured NFCU loan to hopefully help my credit score since my file is thin with no installment credit. 

It always works with FICO08 and FICO09. When people say "it doesn't work if you already have a ________ loan", what they mean is they already got the installment loan boost somewhere else.

 

It doesn't work with the old versions most mortgage lenders still use.

 

There are 2 independant scoring factors involved:

1. High util % on an installment lowers your score.

2. Having one or more open installments boosts your score. This factor is binary: 0 OR >0. So 6 open accounts count the same as 1 open account.

 

If you have an installment with a high balance the 2 factors cancel so the net effect is ~0.

If you pay it down to ~ <9% you get the maximum benefit.

The day you pay it off you lose the benefit.

 

The "hack" was finding a way to keep it open for more than a couple of months after getting it paid to <9%, and while paying negligible interest.

 

If you have no open installments and you do this right you will definitely boost your FICOs. If you are at a level where 20-30 points would make a difference it's worth doing.

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1 hour ago, Occam said:

...

 

If you have no open installments and you do this right you will definitely boost your FICOs. If you are at a level where 20-30 points would make a difference it's worth doing.

 

I've never tried a Navy secured loan, but I'd imagine it works the same as a Navy unsecured loan, which does work.  So does a USAA unsecured loan.

 

I would find the loan with the lowest interest rate possible and the longest repayment terms available.  You also need to ensure that whatever loan product you choose, payments above the required monthly installment carry over to future monthly payments.  There are loans where an extra payment does not relieve you of the requirement of following set monthly payments.

 

Also, don't let being a cheapskate ruin your plan.  The first time I tried this was with a $30,000 USAA installment loan.  I took the loan out for five years at 12% and it posted to my credit reports within a week.  At that time I planned on paying the loan down to $500, but then realized that it would cost me $60 per year in interest.  So I then decided to pay off everything but $100 and save $48.  Makes sense, right?  Well, think again.

 

Next month I get a letter in the mail saying "We thank you for successfully paying off your USAA loan.  Come back for another any time you want!"  Going online to check this weird letter out, I see my loan was paid in full with a zero balance.  The turds forgive balances of $100 or under.  In the end, my credit score dropped.  Worse was that the almost $100 I had already paid in interest got me virtually zilch.  Don't listen to any tightwad spouse and leave a $200 or even $300 balance on the loan.  If the approximately $3 in interest every month is going to kill you, you shouldn't be playing this game in the first place.   

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9 hours ago, Occam said:

It always works with FICO08 and FICO09. When people say "it doesn't work if you already have a ________ loan", what they mean is they already got the installment loan boost somewhere else.

 

It doesn't work with the old versions most mortgage lenders still use.

 

There are 2 independant scoring factors involved:

1. High util % on an installment lowers your score.

2. Having one or more open installments boosts your score. This factor is binary: 0 OR >0. So 6 open accounts count the same as 1 open account.

 

If you have an installment with a high balance the 2 factors cancel so the net effect is ~0.

If you pay it down to ~ <9% you get the maximum benefit.

The day you pay it off you lose the benefit.

 

The "hack" was finding a way to keep it open for more than a couple of months after getting it paid to <9%, and while paying negligible interest.

 

If you have no open installments and you do this right you will definitely boost your FICOs. If you are at a level where 20-30 points would make a difference it's worth doing.

Thank you for breaking this down for me. 

I have zero open installments so this will help me with a score boost while I work on getting the last 3 baddies off my report. 

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8 hours ago, PotO said:

 

I've never tried a Navy secured loan, but I'd imagine it works the same as a Navy unsecured loan, which does work.  So does a USAA unsecured loan.

 

I would find the loan with the lowest interest rate possible and the longest repayment terms available.  You also need to ensure that whatever loan product you choose, payments above the required monthly installment carry over to future monthly payments.  There are loans where an extra payment does not relieve you of the requirement of following set monthly payments.

 

Also, don't let being a cheapskate ruin your plan.  The first time I tried this was with a $30,000 USAA installment loan.  I took the loan out for five years at 12% and it posted to my credit reports within a week.  At that time I planned on paying the loan down to $500, but then realized that it would cost me $60 per year in interest.  So I then decided to pay off everything but $100 and save $48.  Makes sense, right?  Well, think again.

 

Next month I get a letter in the mail saying "We thank you for successfully paying off your USAA loan.  Come back for another any time you want!"  Going online to check this weird letter out, I see my loan was paid in full with a zero balance.  The turds forgive balances of $100 or under.  In the end, my credit score dropped.  Worse was that the almost $100 I had already paid in interest got me virtually zilch.  Don't listen to any tightwad spouse and leave a $200 or even $300 balance on the loan.  If the approximately $3 in interest every month is going to kill you, you shouldn't be playing this game in the first place.   

I just hung up with NFCU and they said it just pushes out your due date further so this will definitely work with them. 

I'm going to go ahead and do the share secured loan today and pay it down to 9% and let it help me boost my scores for the next 6 months. Only doing 6 months because I'll be getting a car in the upcoming months so trick will be useless then and my student loans will come out of CO

 

Thanks so much for this info, its greatly appreciated. 

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