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Will this help in the long run or am I waisting my money?

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whydoineedaname
Regular Contributor

Will this help in the long run or am I waisting my money?

Okay, so rewind a 1.5 years we had BK7.  Fast forward to a few months ago:

 

We started working on rebilding our credit in preperation for buying a house when it seems like the right time.  As part of the rebuilding process our credit union reccomended two things...  One was a secured line of credit the other a secured credit card.  We opted to do both,  we did $1000 on the line of credit and then $550 on the credit card.  The credit card has been paid in full each month so far so... We are not paying intrest.  However, we do pay a bit of interest on the loan.  The credit union is reccomending letting it report for the full 12 months saying that anything short of that wont make much of a difference to our credit.  Part of me thinks, they say that because they make less money if we pay it off early Smiley LOL

 

My question is,  Do you guys think letting a small $1000 year long loan run the full term is going to make much of a difference?  OR, should I just pay it off early and be done with it?

 

Right now I have the cards listed in my signature that have been opened since we opened the line of credit.


Equifax 3/29/2013 - 649, 4/1/2014 - 651, 4/14/2014 - 662, 4/16/2014 - 655
Transunion 3/29/2014 - 648, 4/29/2014 - 650, 5/1/2014 - 653, 6/10/2014 - 662 (barclay/discover), (4/16/2014 - 658 - lender pull)
Experian 4/1/2014 - 653, 4/14/2014 - 669
What in my wallet? Secured Card $550, Barclaycard Reward $3100, Discover IT $1300, Kohl's $400, Navy Federal cashReward $2500, Navy Federal $17800 for a car 2.79% for 72 months.
Message 1 of 4
3 REPLIES 3
IamB2
Established Contributor

Re: Will this help in the long run or am I waisting my money?


@whydoineedaname wrote:

Okay, so rewind a 1.5 years we had BK7.  Fast forward to a few months ago:

 

We started working on rebilding our credit in preperation for buying a house when it seems like the right time.  As part of the rebuilding process our credit union reccomended two things...  One was a secured line of credit the other a secured credit card.  We opted to do both,  we did $1000 on the line of credit and then $550 on the credit card.  The credit card has been paid in full each month so far so... We are not paying intrest.  However, we do pay a bit of interest on the loan.  The credit union is reccomending letting it report for the full 12 months saying that anything short of that wont make much of a difference to our credit.  Part of me thinks, they say that because they make less money if we pay it off early Smiley LOL

 

My question is,  Do you guys think letting a small $1000 year long loan run the full term is going to make much of a difference?  OR, should I just pay it off early and be done with it?

 

Right now I have the cards listed in my signature that have been opened since we opened the line of credit.


They are partly right. Yes, they want to make money with interest, but continuous reporting of on-time payments wouldn't hurt. Besides, this being a secured loan, how much could it really be costing you in interest. I have a $2,000 secured loan and I pay 2% interest while my savings account used to secure the loan earns about 1.5% per year.  So I pay a net of 0.5% interest. To give me a good TL I can live with that payment. 

 

Hope that helps. 

FICO® EQ 717 (3/5/15); TU08 732 (3/5/15); EX: 723 (3/5/15) - Last app 3/15/15; Inquiries: A TON!

CITI ThankYou Preferred - CL: $2,000




Starting Scores: 590s on 12/2013. Hover over card image to view details! *After Amex approvals - [I was supposed to be] Gardening!*
Message 2 of 4
whydoineedaname
Regular Contributor

Re: Will this help in the long run or am I waisting my money?

Yeah, so I am paying 4% and only earning .25%.   Guess that the $23.33 is not THAT MUCH...

 

 


Equifax 3/29/2013 - 649, 4/1/2014 - 651, 4/14/2014 - 662, 4/16/2014 - 655
Transunion 3/29/2014 - 648, 4/29/2014 - 650, 5/1/2014 - 653, 6/10/2014 - 662 (barclay/discover), (4/16/2014 - 658 - lender pull)
Experian 4/1/2014 - 653, 4/14/2014 - 669
What in my wallet? Secured Card $550, Barclaycard Reward $3100, Discover IT $1300, Kohl's $400, Navy Federal cashReward $2500, Navy Federal $17800 for a car 2.79% for 72 months.
Message 3 of 4
ezdriver
Senior Contributor

Re: Will this help in the long run or am I waisting my money?

They are giving you good advice. Consider that small amount of interest to be an investment in your credit profile rebuilding. Mortgage lender pay attention to tradelines with 12 months or more payment history.

 

All the best with your rebuilding efforts.

 

Yohan

Message 4 of 4
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