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Is this something I should think about doing?

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Anonymous
Not applicable

Is this something I should think about doing?

My university offers a credit builder program, what do you all think about it:

 

  • The member pays the total interest upfront.
  • GUASFCU disburses and freezes the principal amount in the member's account.
  • GUASFCU makes payments toward the loan balance at a regular interval on behalf of the member.
  • Upon last payment, GUASFCU unfreezes and transfers the principal amount out of the account.
  • Upon last payment, the member is reported to have paid on time and in full each month to the credit bureaus.
  • Credit union makes your loan payments for you.
  • No maximum principal
Message 1 of 7
6 REPLIES 6
youdontkillmoney
Valued Contributor

Re: Is this something I should think about doing?

Presumably as ayoung adult you should learn to handle your finances, be disciplined etc and even learn from your mistakes; it is about learning about pesonal finance, not contnue t let someone else handle your finances; that's what Hollywppd stars do and blame the handler when they are bankrupt. I got a credit card as a freshman in college in 1991 since there were apps posted on campus everywhere, esp. citibank and that was the start of handling my own personal finances, learning I better be able to pay the minimum. Unless you already cannot handle your own financial affairs at your age already, i would not consider such a program.

Message 2 of 7
stellar
Established Contributor

Re: Is this something I should think about doing?

Sounds like a secured loan.  There are lots of places that offer those and many ppl on these forums have used them to build credit.  For FICO scores it's good to have a mix of credit: credit cards, installment loans and mortgage.  So if you already have student loans, those will count as an installment loan.  In that case you wouldn't need it.  But if you have no installment loans you could get a secured loan like this.

Message 3 of 7
stellar
Established Contributor

Re: Is this something I should think about doing?

Also, good on you for learning about credit and asking questions!  You're off to a good start.

Message 4 of 7
RobertEG
Legendary Contributor

Re: Is this something I should think about doing?

You pay the full interest up front, meaning they get all their profit before you pay a dime against the principal.

I would never enter into such a loan agreement.......

Message 5 of 7
NRB525
Super Contributor

Re: Is this something I should think about doing?

For credit building, this does not sound like a winner.

You don't get the payment history on your credit report until the end of the loan term and all is paid off? How long is that? And you only get the loan history, not the ongoing payments report of an open account being paid? Even worse. Once the loan is paid off, it has less positive impact on your current FICO score. It's only good payment history.

 

If you want to build an active credit history, go to SDFCU and set up a savings account with $250, then get their secured VISA credit card for the $250 limit. Or go for more in the savings. Use it for a few items each month, pay the bill, and it will report to your credit file. No interest cost, no HP.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 6 of 7
Anonymous
Not applicable

Re: Is this something I should think about doing?


@Anonymous wrote:

My university offers a credit builder program, what do you all think about it:

 

  • The member pays the total interest upfront.
  • GUASFCU disburses and freezes the principal amount in the member's account.
  • GUASFCU makes payments toward the loan balance at a regular interval on behalf of the member.
  • Upon last payment, GUASFCU unfreezes and transfers the principal amount out of the account.
  • Upon last payment, the member is reported to have paid on time and in full each month to the credit bureaus.
  • Credit union makes your loan payments for you.
  • No maximum principal

I say come here and get your credit education.  You can do it yourself.  I agree with Youdon'tkillmoney on this one.  You need to do it for yourself. Smiley Wink

Message 7 of 7
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