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Im new to the game, oldest card is only 5 monthls old. Well, I want to maximize my Fico score as Installment loan accounts for 10% of the score..I know that upon completion of repayment, Im facing a score drop, so Im thinking about going for 18 moths term in hopes of capturing best cards with the best rates at around 14-16th months of history. Do you think this is a good strategy? Do they perform credit check? Im referring to say DCU. Any thoughts?
@orestrus wrote:Im new to the game, oldest card is only 5 monthls old. Well, I want to maximize my Fico score as Installment loan accounts for 10% of the score..I know that upon completion of repayment, Im facing a score drop, so Im thinking about going for 18 moths term in hopes of capturing best cards with the best rates at around 14-16th months of history. Do you think this is a good strategy? Do they perform credit check? Im referring to say DCU. Any thoughts?
By "I'm new to the game" I'm assuming you mean you have a clean credit file, no past BKs, derogs or anything like that
In which case, I'm gonna say skip the credit builder loan, it's really not necessary.
yeah, no derogs. Installment loans aacount for 10% , why skip? If I understand correctly, this type of loan will help me to gain 60 more points..
I think Credit Builder and Shared Secured loans will help your FICO score about equally. I think Shared Secured typically have a lower interest rate. So between the two Shared Secured are normally the better deal if you have the cash up front.
For the term longer is better. Get the longest term they will allow for the smallest amount. Granted, we are talking normal Credit Builder loans, you will not have access to the built up cash until the loan is paid off. But a 4 year term is better than a 2 year term.
I don't know the answer for the most important question, though. I don't know if a credit builder type loan will really help you be approved for the best credit cards. Once you get a couple years of revolving history, most credit cards are not that difficult to get approved for (as long as you don't apply to too many at once). Even without the credit builder loan, you will be approved for most credit cards as long as you have the income to support the card. Higher credit scores may make it more likely you will be instantly approved. Where it will probably help the most is FICO scores are used heavily in setting your interest rate. I suppose that could make the credit builder loan wise financially. Well as wise as carrying a credit card balance is.
Lastly, if you are thinking about joining DCU, they will HP your EQ CR to join. For the next 90 days, they should use the same HP for anything that requires a HP. I don't know if DCU would normally HP for a credit builder loan, though. Most CU's do not HP for credit builder loans. In general, no credit union is going to deny you a credit builder/shared secured loan for bad credit. IMO one of the best things about DCU is the free EQ-04 FICO score each month (with a checking account). It is a great score to keep an eye on if you are ever planning on a mortgage. DCU is also a great CU for auto loans. However, there is no guarantee they will offer very attractive auto rates in the future.
@orestrus wrote:yeah, no derogs. Installment loans aacount for 10% , why skip? If I understand correctly, this type of loan will help me to gain 60 more points..
It's just not necessary. All you gotta do is keep your accounts for a little bit and you'll be set to go.
Don't say anything can "gain you" x amount of points. Everybody's credit file is different, and nothing is guaranteed to give you the same results as someone else.
If you do get a secured shared loan/secured loan, then you should try to get the terms to be 48-60 monthsfor $500 deposit. But yeah, there's no downfall to doing this. Another option, if you own a vehicle free and clear; you could take out a low interest rate loan against your vehicle called a cash out vehicle refinance. I did with my truck and currently pay around $137.00/month @ 8.5% from local credit unon for about 5 years. Sure I'm paying interest but the loan is labelled as an Auto Loan on all 3 reports. If I decide to get a new vehicle in the next 15 years; that history itself will probably land me in top tier. Though I'll probably have an 800+ credit score by that time as well.
Anyways, that's a few options for you. Cheapest is $500 in a secured loan for 24-60 months (higher term is better for long term) and then Auto Refinance 48-60 months (higher is better and gets you top points for future auto loans). Good luck!
Yes, if you don't have any installment loan history definitely get a Shared Secured loan. It will help you out if you ever want to get an auto loan or mortgage.
The place to go for one is Alliant Federal Credit Union. You have to open a savings account and then apply for the loan about a week later.