@Anonymous wrote:You know I wish there was a single link here on the Forum that described it. (i.e. click on the link and then it it describes it step by step in a few paragraphs)
As I understand it, it works like this:
Open up a savings account with the lender. Your $500 acts as security for the loan.
They give you $500.
You then pay off 90% of the loan ($450).
You then keep the loan open by making a small payment every 4-5 months ($3 or so).
Alliant is supposed to be friendly to that approach. Revelate is the guy who really brought it to everyone's attention I think. If you start a separate thread about it and ask for him by name, he will probably chime in.
Would Wellsfargo be a good bank to do this at? I've had an account with them since 09, they'd be the ones at the top of the list since I've been a happy customer for the longest.
Is 500 the recommended amount? And basically, I just use 450 of the same 500 they lend me, make a payment, and continue just to pay the small interest and reach that 4/5 year until its completed. How soon into the loan do I make the 90% payment? 1 month in?
@Anonymous wrote:My advice is to start a brand new thread with the subject Need Help With Share Secure Trick. One of the regular contributors is Revelate and he knows all about it. Mention his name and he will likely chime in.
I have never done it myself so the mechanics of which lenders are most favorable, when do you make the first payment (etc.) is all stuff I can't comment on, aside from the fact that I believe Alliant is friendly to the approach (paying most of it off and allowing it to remain open). What I do know a small amount about, however, is the general way that FICO works, and I can assure you that right now you are being penalized in two ways:
In the Credit Mix area, you are losing much of the available points because you have only one kind of credit (revolving).
In the Amounts Owed area, there is a factor that looks at your open installment loans and measures how much of them are paid off. Since you have no installment loans, you necessarily are losing all the points from this factor too.
The Share Secure trick enables you to quickly get an installment loan and have paid most of it off, while still keeping it open for 5 years.
Note that the same principle applies to your first car purchase. Let's assume that your first car costs 15k and that you have saved 5k as a down payment. The correct choice is NOT to get a loan for 10k. Rather it is to get a loan for 15k with which you buy the car. Then you immediately pay it down by 5k. You'll want a lender who is cooperative here too and it will enable you to get a loan that is quickly paid down to 66%, for which you will get a FICO reward.
I will start a new thread and hopefully he will able to chime in then. FIrst step is to get that AU account off my report. Thanks for all the help and advice, you've been nothing but a blessing!!
@Anonymous wrote:
@Anonymous wrote:If nobody chimes in (on this thread) to answer that particular question, feel free to start a new thread. E.g. How do I get removed as an AU?
The installment loan idea is called a Share Secure loan. You can google that to find out more about what it means. What people here recommend -- for a person who has no open installment loans -- is to add a $500 share secure loan, pay off most of the capital early on, and then keep the loan open for the full term of the loan (see if you can get one for at least 4 years, 5 is better). Alliant is a lender that seems very receptive to this approach. You will end up paying very little interest and it will help your score substantially, This is another guy's idea on this site, but it makes a ton of sense for someone like you with no installment loan history.
By the time that the SS loan closes, it sounds like you will have a car loan in place, so you will be good to go with creating an installment history for yourself.
Depends on teh creditor. In the past, I have written letters, called up, or had the primary creditholder call.
It is a Barclays card