Jump to content

Installment Loan Hack: A Double Edged Sword


Recommended Posts

A couple of years ago I experimented with the installment loan hack and verified that it does work. I took out a 5-year loan for $30k from my favorite bank and, as soon as it posted, I paid it all off except for $100. My next payment was somewhere in 2024. The effects on my FICO were virtually instant -- from 820 to 850.

 

A couple of months ago I got tired of seeing it on my spreadsheet and just paid it off. This week it just hit my credit reports as closed. And my FICO dropped around 27 fooking points on all three CRAs.

 

EX, which was always my weakest, went to 797.

 

I suppose I need to unfreeze EQ and take the hit for another installment loan.

 

 

Sent from my iPad using Tapatalk

Link to post
Share on other sites

what is your favorite bank?


While none are perfect, USAA comes closest.

That could change, though, when Hegebank opens.

Were I a thief in a pink-flowered jacket, I would have answered Skank of America.


Sent from my iPad using Tapatalk
Link to post
Share on other sites
  • 2 weeks later...

My old paid mortgage fell off my reports about 2 months ago. FICOs dropped from typically 820 to 810 with my usual monthly balances (10% total util). However, they became much more sensitive to util changes. Had a temporary increase to about 20% and FICOs dropped to about 790. For similar changes when the paid mortgage reported drops were about half that almost never going below 800 unless I had 30% util or more.

 

Out of curiousity I pulled my full reports to check softs and the drop seems to have triggered ARs from just about everyone. Normally ARs are at regular intervals of every 6 to 12 months. So it appears out of sequence AR triggers are FICO related rather than something else specific to the reports.

 

So apparently that 10 y/o closed (0 balance)  mortgage had significant impact on scores. Consistent with a installment loan and a small balance haiving a really big effect.

Link to post
Share on other sites
My old paid mortgage fell off my reports about 2 months ago. FICOs dropped from typically 820 to 810 with my usual monthly balances (10% total util). However, they became much more sensitive to util changes. Had a temporary increase to about 20% and FICOs dropped to about 790. For similar changes when the paid mortgage reported drops were about half that almost never going below 800 unless I had 30% util or more.
 
Out of curiousity I pulled my full reports to check softs and the drop seems to have triggered ARs from just about everyone. Normally ARs are at regular intervals of every 6 to 12 months. So it appears out of sequence AR triggers are FICO related rather than something else specific to the reports.
 
So apparently that 10 y/o closed (0 balance)  mortgage had significant impact on scores. Consistent with a installment loan and a small balance haiving a really big effect.

Yes, mortgages are basically installment loans and when it falls off it can trigger the changes a closed installment loan often causes.

And while it may be a non-event for us, it is still something to analyze. There are also those for whom a 20-point drop is indeed a big event.

I sort of like having an 850. I am thinking of applying for another 5-year personal loan to take advantage of the installment loan hack again.

And thanks for the date about the soft inquiries. I can see where a significant score drop would cause that. I think I will go and check mine now!


Sent from my iPad using Tapatalk
Link to post
Share on other sites
14 hours ago, PotO said:


Yes, mortgages are basically installment loans and when it falls off it can trigger the changes a closed installment loan often causes.
And while it may be a non-event for us, it is still something to analyze. There are also those for whom a 20-point drop is indeed a big event.
 

Interesting coincidence? Today I got snail mail from Amex that offered 20,000 MR point for "activating" POT (Pay Over Time). Normally they send out 10k offers twice a year or so. 

Link to post
Share on other sites
Interesting coincidence? Today I got snail mail from Amex that offered 20,000 MR point for "activating" POT (Pay Over Time). Normally they send out 10k offers twice a year or so. 

Lately AmEx has had some interesting offers. Usually I can get 5,000 MRP for adding an AU, but yesterday they were offering me 20,000. I'm searching for candidates right now.


Sent from my iPad using Tapatalk
Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.




  • Member Statistics

    • Total Members
      183,028
    • Most Online
      2,046

    Newest Member
    dallas21
    Joined
×
×
  • Create New...

Important Information

Guidelines