SECURED LOAN? DO IT OR DON'T?

[bella1013]

I am again asking this question as I haven't gotten a clear answer on it.  I am trying to rebuild my credit in any way I can.  I read about secured loans.  I was thinking (only for the purpose of helping my credit) of getting a $5,000.00 secured loan over 12 months.  I do not want to keep it for the 12 months.  I wanted to get the loan, pay $1,000.00 a month for 5 months or maybe pay it off it 4 months.  If I do this, is it going to help my credit?  Is it worth it?  Is that too early to pay off the loan, do I need to keep the loan going longer then 5-4 months?

[guiness56]

If you get a secured loan it will help in your mix of credit as long as it is open.  Once closed it will continue to be factored into your AAoA.

A secured loan is an installment loan.  These factor very little into your score and paying it off early will generally not help very much. 

Do you have any CC?  That is where the majority of your score comes from.

[Henchman21]

A creditor isn't really going to be that impressed with you making 5 payments. It would need to be at least 12 months.

[bella1013]

Yes.  I have a $1,000.00 secured credit card and a $500.00 unsecured capitol one credit card.  These cards are only about a month old. I've paid all my bad debts off two months ago and have just wrote GW ltrs. to try to get some of them taken off.  My average credit age is about 4 years.  Although all my debts had been in collections except for the two new cc's.  I've just started fixing my credit a couple months ago.  I know it takes time to rebuild credit but anything that I can do now to help my credit even more and move it along faster I'm willing to do.  Kind of an emergency, will be applying for a mortgage in a few months. 

[bella1013]

@hentch..if that's the case then I'm probably not going to do it.  I would want to do it and have it paid off before I apply for a mortgage.  I don't want the lender to see that I have a lot of other debts I have to pay along with a mortgage.  Thought it might be a quick trick I can do to help me credit even a little bit before applying for the mortgage.

[guiness56]

The installment loan would help with credit mix.  The longer you make timely payments the better.   Get a smaller loan and pay it off over a year or so. 

[bella1013]

Thanks

[fishbjc]

Definitely, try $1k and pay it off in 12 payments. 

[Lzzybeth]

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@guiness56 wrote:

The installment loan would help with credit mix.  The longer you make timely payments the better.   Get a smaller loan and pay it off over a year or so. 

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+1 - I say do it.

I took out a secured installment loan a year ago with my local credit union, using my motorcycle as collateral. I don't think I would have been able to get my $5K MasterCard with the credit union if I hadn't taken that first step out of "credit wasteland" by going for the installment loan.

[bella1013]

Thanks!!