Installment Loan

[Bones]

Hello to the group!  I recently opened a secured installment loan for $1,500 on March 20th.  My note is a 12 month note with payments around $138.00.  I have already made one payment within a week of my opened account.  So instead of my payment being due 4/20 it now shows 5/20.  After searching and reading around I still am unsure of what is the best way to approach my new loan.  It does not show on credit report as of yet.  My statement is around the 20th and I assume they will report shortly after.

I have absolutely no revolving credit (no beacon either).  I have just recently received a Cap One secured credit card in the last week to help establish some credit. The installment loan and new secured credit card are all I have.  My CR's show zilch!  Can someone advise me the best way to deal with my installment loan to boost my score?  Should a pay the balance down significantly and then make the minimum payments and pay it off several months earlier or let it ride like it is and do the minimum for the entire year?

Reason for asking is that I would think the debt/credit ratio would be high and negatively hurt me until the balance was lower.  Shouldn't I be under the 30% mark to get the most positive score increase?  That would mean my balance would need to be $450?  Perhaps installment operates different than revolving on this situation.  Thanks in advance for any info, advice!

[Booner72]

hello - and congrats on your first post.  You are doing the exact right thing to build credit.  However, just pay that installment loan ON TIME every month.  That's it.  You don't want to pay it early as then it will not show an open tradeline and hurt your "mix of credit" -  Leave it and pay it each month.

Revolving credit is where you have the control.  In fact, it's nearly the only thing we can control related to our score.  If I were you, I would get another revolving line of credit (another secured....or you can even go to your credit union and get one there  - it will "grow with you" as someday with good credit it could turn into an unsecured card and the limit can grow.  Capitol one doesn't tend to grow with you.  Have one report a zero balance every month, and have one report a balance that is 1-9% of the limit of the card.  You can use it all you want each month, just pay by the due date, and then if you use after that, find out the dates the statements come out (This balance is what is listed on your Credit Reports each month), make sure you pay again.  You don't really have to worry about maintaining this balance thing until you've had credit long enough to get a score.  (You don't have a score, right?)

So having the 1 installment and 2 revolving report for six months ought to generate a score for you -----

[Bones]

Thanks for your reply.  Great to hear some advice on what to do for getting a good start on establishing credit.  As for your question if I have a score, I recently applied for an auto loan and the finance manager told me I had no Beacon Score and I could not even be considered for a loan.  Beacon must differ from FICO as I do have a score, as my current EQ is 583?  Maybe no revolving or installments represent no Beacon.  So many variables it seems.

However, I pulled my scores on March 10th:

EQ - 605

TU - 562  

EX - 713 ---   don't understand why it's this high, still get denied credit.

But, when I tried the loan deal with a Nissan dealership they somehow put 14 inquiries on my reports through different banks.  It brought my EQ from 605 to my current (4/8/12) 583.  Unsure of the other 2 scores as I only subscribe to unlimited Equifax reports and scores. I put a dispute in with the CRA's but they verified it as accurate. Sales rep told me they would only pull soft inquiries and it would not affect my credit score.  As we were sitting there my email went off on my cell phone with an alert of all the inquiries.  It really bummed me out because I knew it was going to put a dent in whatever score I did have.

My reports do not show any balances, no negatives, just 19 inquiries in the last two years.  14 from Nissan dealership in a matter of 10 minutes!  And I am sure when my Cap One card and Installment loan hit the reports it will take a dive again for a while.  I been reading around and seen where if shopping for an auto loan or mortgage that multiple inquires are treated as one, but I don't think that is how it turned out on me.  I got to try to fix that if I can.  I took a 22 point drop for 14 inquiries.

I will do what you say and look for another secured card to go with my Cap One.  I have burned the internet up the last week trying to soak in all the possibilities and I am glad I posted here and for you answering!

Appreciate the info, Booner72!

[Booner72]

The scores that you are getting online are not real FICO scores.  The BEACON score is the Equifax 5.0 version you can by only here and at the equifax site, but the equifax site also sells a FAKO - yours must be that one, unfortunately.  You have to have 6 months of reporting tradeline to generate a true FICO score.

Having that many inquiries for a dealership pull is common - they try all sorts of banks to get you approved - When you buy a car (or house), FICO only dings you once for all those inquiries (if within the 30 day window).  (Credit cards WOULD be all dinged). The hit on your score is minimal and exagerated by others because people simply don't know - I've had so many inquiries this last year for house, car refi, car, cc's - And I've had Scorewatch the whole time and I never lost a single point. If that sales rep told me it would only be soft inquiries I'd be raising cain to get those removed. 

With 2 revolvings and that installlment, you'll have a good score in to time.  It's MUCH easier to establish credit than have to be stuck rebuilding good credit that one let become ruined by being careless and ignorant (ME!).

Good Luck!!

PS:  You can buy a version of the Transunion FICO score here at this site (the rest online are FAKE FAKE FAKE) but it's an outdated model of the TU score that isn't used much.  Once you get credit, apply for the WALMART card because you get a FREE FICO TRANSUNION SCORE every month (version 8.0).  The one most used is version 4.0.  The one you can get here is the 98 version.  Confusing, I know.

You cannot buy your Experien score anywhere.  They used to sell it but stopped a few years back.  The only way to get that score is to have a lender get it for you - so the one you have reported is so high because it is simply not a FICO and the algorithms used to get the score are different than FICO.

it is interesting that you can even get FAKO scores w/o any credit.   The scores are generated from the info on your reports - that is all the same.  How it's calculated is what is different.  And since lenders use FICO, that's why 'we" care about the FICO/FAKO difference.

Last advice:  Go to credit karma.  It's a free sight that allows you to see your Transunion report information, and you can update daily if you want.  But IGNORE THE SCORE it's fake.  My husband's Transunion Credit Karma score is 100 points lower than his real FICO transunion.  Others are higher..etc etc.