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Questions about credit score disclosure from lender

I recently got pre-approved for a home loan.  A few weeks later, I received a letter in the mail from my lender that said they must disclose the scores that the lender receives from their consumer reporting agency.  They provided the credit score from each agency along with "key factors adversely affecting your credit score in the model used".  While I am content with this score, I do want to maintain it, and I have questions about one key factor in particular: "Lack of recent installment loan information".

Can someone give more examples of "installment loans"?  I think the only account of mine that might fall into this category was a student loan paid in full & closed 3 years ago right before interest became due.  If I am looking to buy an investment property in a few years, is there something other than a car loan that would help me prevent this ding to my score?  Equifax and Transunion noted this as one key factor.
  • November 23 2011 - Phoenix
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Answers (7)

Best Answer

Profile picture for sunnyview
I think that car loans, student loans, sometimes a furniture/computer rental paid at a fixed rate for a fixed period and mortgages are all reported as installment loans. There is some information on different credit account types here.

You can talk to your lender, but an installment account may not be worth seeking out if you don't need one since too high a balance may actually push your credit the other way. A good lender can tell you what they think. Look at all your ratios together and make sure your credit card balances stay in check. That seems to be what gets many people down when it comes time to qualify.
  • November 23 2011
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That statement "Lack of recent installment loan information", is one of the least punitive "codes" that can exist in regards to a credit score. Don't open any installment accounts just to eliminate that code. Unless your scores are below 620, or so.

What that code means is that there is really nothing wrong with your credit. This is the only thing we could find that is remotely negative about your history. You don't abuse credit.

That's good news. That is what is said at the bottom of the report of people who have perfect credit. They have to say something, and that "code" is nothing to worry about.
  • December 22 2011
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Profile picture for Brady82
Thank you all for weighing in on this.  I don't think I'll be starting an installment loan/credit anytime soon, but the non "talk to your mortgage officer" resources were very helpful.
  • December 22 2011
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Profile picture for Rita Walker
You recently were approved for a home loan. I am assuming that you are in the market for that home now. Once you start paying on that mortgage you should not have that noted on you report.
  • November 27 2011
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You might ask on the forums here  www.myfico.com , I seem to be getting good advice there.
  • November 27 2011
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Another thing that I've heard is don't close any long term credit card accountseven if high interest being the length of those types of debts add to the score as long as the balances aren't close to the limit.
Yes check with a mortgage officer, you can use the one at your local bank or look online for credit questions--just don't give out any personal information online.
  • November 24 2011
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Profile picture for Sharon Lewis
Talk to your lender about it and also call Equifax and Transunion to get more information and then try to fix this.
  • November 24 2011
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