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Community Leader
Senior Contributor
Posts: 3,730
Registered: ‎07-17-2014

Adding an installment loan -- the Share Secure technique

[ Edited ]

A lot of people have been asking here on the Forum about a certain technique for improving your credit score, which is to add a small installment loan, pay most of it off, and then continue to keep it open for the full loan term (e.g. 4-5 years).  This thread aims to do two things:

(1)  Explain the big idea behind the technique, why it works, what people it will help, and what people it will NOT help.

(2)  To give you step-by-step instructions on how to implement the technique if you decide it is right for you, using a very particular lender as an example.  Note that many other lenders could be used, but we are choosing one (Alliant) for which we know it will work, just so you have a concrete example.  The same steps might work for a number of other lenders.

What is this thread NOT trying to do?  It's not a good place to discuss whether FICO is crazy for scoring installment loans the way they do, or for criticizing people who use the technique, or anything else like that. There are plenty of discussion threads that do that, and that's great.  But we are just trying to stay focused on the nuts and bolts of the technique and how to use it, so that people who want that info can get it easily.

We will continue to edit/update the initial info at the top of the thread to improve it.  And it's worth pointing out that we wouldn't be doing this now if a number of people, led by myFICO contributor Revelate, had not in 2015 brought this technique into a much broader awareness.

That said, here it goes.

What is the technique?
The technique is to add a small "share secure" installment loan to your credit profile.  After you do that, you then quickly pay off most of it, so that you owe < 9% of the original loan amount.  You then keep the loan open for the whole term of the loan (e.g. 4-5 years).

What is a Share Secure loan?
A Share Secure loan is a particular case of a secured loan, as opposed to an unsecured loan.  When you get a car loan, for example, that loan is secured by the car itself.  That's why the bank owns the title to the car, until you pay it off -- and it is why the bank can repossess your car.  A mortgage is another example of a secured loan. 
       With a share secure personal loan, you open a savings account with the bank or credit union and deposit the full amount that you plan to borrow.  Once you take out the SS loan, that amount is frozen in your savings account.  Typically, as you pay it off, more and more of those funds are unfrozen.
       Different lenders will use slightly different language for this same basic idea.  At Alliant, for example, you will hear it called their Savings Secured Long loan.  At some other lenders it might be called a Credit Builder loan.  At some credit unions it would be called a Share Secure Loan.  Don't worry about the exact phrase the lender uses.  Instead focus on whether the product works the way we are describing.  Choose a lender that lets you do all of what this technique entails.

Who will benefit from this technique?
The people who will benefit the most are people who have no installment loans, open or closed, on their credit report.  People who will also benefit (but not as much) are people who do have a closed installment loan but who have no open installment loans.

Who will not benefit from this technique?
*  People who already have an open installment loan.
*  People who need to improve their score very fast (e.g. < 60 days)
*  People who do not have $510 to open a new savings account. 
*  People who hope for some magic bullet, something that will raise their score a huge amount.
These people should NOT use this technique. They will be disappointed.

Does this technique stop working if something specific changes in my report?
Yes.  If you later add another, probably much bigger, installment loan, then this SS loan will stop mattering.  Instead, the "installment" portion of your score will be driven much more by the big loan with the big (mostly unpaid) balance.  But the technique will benefit you until that happens.  Thus, some people use the technique to help raise their score as they prepare to buy their first car or a new credit card.

Does opening an SS loan involve a hard inquiry (hard pull) to my credit report?
Some lenders might do that.  Many do not.  Alliant, which we will use as a case study, does not.  Alliant does a ChexSystem inquiry and a soft pull at one of the big three credit bureaus.  Neither of those will be visible as a hard inquiry.

 

I am preparing to buy a house soon,  Will this technique help my mortgage scores?

The technique is really intended to help a person with his FICO 8 scores, not his mortgage scores.  But... if you have no installment loans of any kind, including closed ones, then it's worth doing.  Also, if getting a 20 point boost to your EX mortgage score would change the value of your "middle" score, then again it is worth doing.  Otherwise it does not appear to help a person's EQ or TU mortgage scores.

Could there be another technique that could help me more?
Absolutely.  Getting your credit card balances in perfect shape will likely help you more.  Getting derogs removed from your report will almost certainly help you more.  So... while you can choose to implement this technique at the same time that you pay off CC debt and work on derogs, you should not mislead yourself over what will help you most.  Derogs and CC debt are far bigger drivers for your score.  Many people are best served by focusing on those things before they consider this.

What should my next steps be?
If you have gotten this far, it must mean that you have read all the stuff above and you can see that this technique is designed for you.  Be really sure about that.  Read the Who Will Benefit sections again.  If so, there are two more things for you to do.

*  Read the next section of this thread, called The Theory Behind The Technique -- or Why It Works.  It's really important for you to understand what you are choosing to do.  You are here on this site not to memorize commands from strangers, but to learn how the FICO model works, so you can make informed choices about what will benefit you most.  You can't do that unless you understand why you are implementing a particular strategy.  "Because the folks at the Forum said to" is not a good reason.

*  Read the third post in this thread, which will give the Step By Step Instructions.  Make sure they all make sense, and then get to work on them if you still want to.

 

UPDATE (Feb 14):

The benefit most users of the technique are reporting is a 28-33 point boost to their FICO 8.  So many people have reported this that we feel comfortable saying that this is a benefit you should expect. 

 

What we have very little reported data on is what this does to one's FICO 9 score.  Thus, anyone willing to take a swing for the sake of science, we'd love to hear about it.  FICO 9 is available through the myFICO 3B monitoring product.  The $30 product gives it to you quarterly, and there is a more expensive option that gives it to you monthly ($40).  Just add your results to the end of this thread.  As with any time you post "test data", you want to make sure your that your profile looks as close to identical as possible both before and after (same number of cards with a $0 balance, same CC utilization, same AAoA, etc.) -- that way we know that it the score change has been caused by the SS loan.

Community Leader
Senior Contributor
Posts: 3,730
Registered: ‎07-17-2014

Re: Adding an installment loan -- the Share Secure technique

[ Edited ]

The Theory Behind The Technique
      or Why It Works

If you have no real idea how FICO scoring works, you need to first develop a big picture understanding of that.  Specifically you need to understand what the five scoring groups are, and what their relative weights are.  You can get that here:

http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

Be sure you have reviewed that and understand it before reading further.

Why does the SS Loan Technique work?

Let's start by remembering that, first and foremost, it helps people who have no installment loans on their reports -- not even a closed one.  It also helps (though not as much) people who do have a closed installment loan, but who have no open loans.

To see the technique in action, let's assume you have no installment loans of any kind (closed or open) on your reports.

One of the five scoring groups is Credit Mix.  It counts for 10% of your score.  If all of your accounts  are of one type (all credit cards, for example) then you get a very low number of points from this category.  To get a high number of points, you want to show that you can manage a MIX of credit types.  Overwhelmingly what FICO will look for first is whether you can manage both revolving credit (typically credit cards) and installment loans.

To make this really simple, almost everybody here has at least one credit card.  So the bottom line is, if you want to get a lot more points from this category, you need at least one installment loan. 

Furthermore, there is some evidence that, even just in the Mix category, some FICO models weigh open loans more heavily than closed loans.  So the fact that the technique adds an OPEN installment loan is additional bonus.

Credit Mix (10%) is not, however, the only category that benefits.  There is a factor in the much larger Amounts Owed category (30%) which also benefits.  And that is something that we'll call "installment utilization" -- for a lack of a better phrase.  It is a lot like credit card utilization, but it applies solely to installment debt, rather than revolving debt.

That factor measures how much of your existing open installment debt you have paid off.  Here's how that factor works.  You take all your current open installment loans (only the open ones -- ignoring all closed loans).  You then add up all the amount you currently owe.  Call that CURRENT.  Then you add up the amounts that the loans were originally for.  Call that ORIGINAL.  Then you divide CURRENT by ORIGINAL and you get a percent.  (Do you see how that is a lot like the credit card utilization calculation?)  When that % is close to 100, or if you don't have any open loans at all, then you get no FICO points from this factor.  But when the % is very low (say 1-9%) then you get most or all of the points from this factor.

Total installment utilization is just one factor from this big scoring category.  Credit card utilization is in the category too and is more important.  But still, because the category (Amounts Owed) is so much bigger than Credit Mix, installment utilization ends up giving you a lot of points, when using the SS Loan technique, in addition to the points you get from Mix.  It's one reason that the technique can have a significant impact on your score -- you get help in two different areas.

In summary:
The technique, when used by a person with no open installment loans, gives you benefit from two different scoring categories: Credit Mix and Amounts Owed.

 


Two final thoughts:

(1) Average Age of Accounts (AAoA)

AAoA is a factor from the Length of Credit History category.  Your AAoA will necessarily go down when you add a new account (e.g. this loan) which in itself can cause a score drop.  But you shouldn't worry about that.  One reason not to worry is that a decrease in AAoA often does not result in a score drop.  If, for example, your AAoA went from 2.8 to 2.1, it would not cause a hit to your score, since FICO looks at the integer value.  Another reason is that, assuming you did cross over an integer value, you would likely cross back over it fairly soon.  (Example: if your AAoA went from 3.2 to 2.8, you would be back to an AAoA > 3.0 in a few months.)  Finally, even if your AAoA goes down in the short term, the bonus from the other scoring categories is greater (for a person with no installment loans).

(2) FICO 8 vs. FICO 9 vs. other FICO models

Not all FICO models reward you the same for having open installment debt that is mostly but not entirely paid off.  In FICO 8 Auto Enhanced, for example, you likely get a good deal of benefit from having a car loan, making the payments for a couple years, and then paying it off.  People in the forums are trying to guess how FICO 9 works in that respect -- maybe it allows you to have no open debt at all and still get much of the scoring benefit as long as you have a couple closed installment loans with strong payment histories.

Maybe!  Right now there is far less hard data on that as there is for FICO 8.  What is certain is that almost no lender is using FICO 9 as of March 2016, and until many lenders do, this technique will be immensely valuable to anyone who has never had an installment loan --  and even to those who have closed loan but none that are open.

 

A final thought about the "mortgage" flavor of FICO scores.  When a mortgage lender pulls your scores, he doesn't use FICO 8 or 9, but much older versions of FICO.  The EQ and TU mortgage score will probably not benefit from the SS loan technique, but the EX score will (assuming of course that your EX has no open installment loan on it).  If EX is already the highest of your three mortgage scores, and a mortgage is all you care about, then the technique may not be a good choice.

 

======

 

You are now set as far as understanding the theory behind this approach.  If you are still interested, however, in reading some of the original research into the theory of this technique, feel free to take a look at this long thread from last year, started by myFICO contributor Revelate.

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Installment-tradeline-utilization-thread/...

Now, we finally come to the step-by-step instructions! 

Community Leader
Senior Contributor
Posts: 3,730
Registered: ‎07-17-2014

Re: Adding an installment loan -- the Share Secure technique

[ Edited ]

Implementing the SS Loan Technique:

     Step By Step

Read all of these instructions and make sure they make sense before you start implementing any of them.  You should try out the links to Alliant as well and play around on their site.  The steps are:

(1)  Open a savings account with Alliant
(2)  Apply for the loan online
(3)  Finalize the loan with a loan officer
(4)  Pay it down
(5)  Wait for it to report to the three CRAs

Each step is separated by at least 2 days, sometimes more.  (For example, between finalizing it and it reporting might take several weeks.) 

The steps are discussed in detail below.  Good luck!

*  *  *  *  *

STEP 1: OPEN A SAVINGS ACCOUNT AT ALLIANT

(a) Make sure you have $520 dollars of cash available for the initial funding of the account (which includes a possible $10 donation to a nonprofit and $10 beyond that just for safety).  That should definitely be enough to secure the loan when you later apply for it.

(b)  Go to this link:
https://www.alliantcreditunion.org/bank/high-yield-savings#features

Read about the savings account, and note that you'll be getting a nice interest rate too.

(c)  When you are ready, click on the button that says OPEN AN ACCOUNT NOW.  If you have never had a relationship with Alliant before, you will have to establish eligibility.  For most of us, that means donating $10 to a non-profit called "Foster Care to Success".  You'll have a chance to do that after you click on the Open An Account button.

NOTE: In the Mother's Maiden Name field, you cannot use spaces, special characters, or numbers.  Good security practice is always to choose a weird phrase that is not in fact your mother's maiden name, since a good hacker could easily do a little research on you and find out what your mother's maiden name is. 

(d)  Set up online banking for your savings account.  You'll need to give a username and a password of course.  Once you are successful, you will see a screen that says

HELLO YourFirstName,

Your membership number is: *******  Show Number


Click on SHOW NUMBER and write it down in a place that is secure

Then scroll down and you'll see some buttons with options.  FUND YOUR ACCOUNT is one of them.  You don't have to fund it right away if you don't want to, but if you can it's worth doing so you can keep things moving forward in preparation for applying for the loan.

NOTE: Alliant does not permit members to fund their accounts with a credit card.  Most people choose to do a transfer from an external checking account.

It will probably take 3 business days for the $510 to appear in your account.

When you have finished that, sign out and then log back in.  You will probably be asked to create a bunch of security questions this time.  You should probably locate the link that says Confirm My Email Address.

OPTIONAL:
Some people choose to set up a checking account with Alliant at the same time or a few days later.  Sometimes there is a promotion for doing this (e.g. $50 bonus or even more).  You can do this or not, strictly optional, not needed for the SS loan.  If you do, you'll want to play around on the Alliant site before you open the savings account, researching the checking account options, etc.  You may want to use Google to see if there is a promotion being offered and if so what the code might be for it.

FINAL NOTE:
In 1-2 days after you open your savings account, you will very likely get a telephone call from an Alliant customer service rep (CSR).  The agent will ask if there is anything he or she can help you with, or questions you have.  The best answer is a friendly "No, thanks.  I am doing fine, but if I have any questions I will give you guys a call and let you know."  Some members here on the Forum have run into trouble asking this CSR questions about loan products -- they end up getting inadvertently told they can't get a $500 SS loan, etc.  You should use the online tools for applying for loans and accounts wherever possible -- getting a CSR involved should be the last resort.  (Though in general Alliant's CSRs are better than average.)


*  *  *  *  *
 
STEP 2: APPLY FOR THE LOAN

(a)  Locate and review the loan we have in mind:
*  Go to this page:
       https://www.alliantcreditunion.org/borrow/get-a-credit-union-personal-loan#compare
You do not need to be logged on to your online banking portal to look at this page.
*  Scroll down slowly and look for a section called Choose the right personal loan
*  Beneath that headline you will see some language urging you to call or apply for a loan.  Do not do that yet
*  Beneath that initial language, you will see a table describing several loan products: Unsecured, Savings Secured Short, Savings Secured Long, etc.  The one you want is Savings Secured Long.
*  Review this product.  When you apply in a few days, you'll want to choose the longest possible term: 60 months.
*  Don't get seduced by the lower interest rate of a couple of the other products.  As you will be paying off almost all the principal early in the life of the loan, it doesn't matter if the longer term option has a slightly higher rate.  In the end you will be paying very little interest.
*  In this case study, we are basing this on you opening a $500 loan.  You could do the same kind of thing with a $1000 loan too.  And indeed, just as with the $500 loan, you will pay off most of the principal early on, which will cause a corresponding amount of money in your savings account to become available; so it doesn't matter much which you choose.  A $1000 loan requires a $1000 initial deposit, of course.

(b)  Give your deposit time to fully materialize in the Alliant savings, maybe 3 business days.  When you log on, the landing page is the Account Summary page.  You should see your savings account listed with both a Current Balance and an Available Balance.  The Available Balance will tell you whether you are ready to apply for the loan.  You want to have at least $510 available ($501 is probably enough).

(c)  Log on to your Alliant account.  Look to the right and you should see 4-5 links.  Choose APPLY FOR A LOAN. 

Under SELECT LOAN look for the choice at the far right.  That should be SHARED SECURED.  Click on that.

You will see three options.  Make sure you are careful to find the right one.  You want the one that is for up to 60 months.  That is Shared Secured.  Do not choose Term Secured or Certificate Secured.  Click on APPLY NOW for Share Secured.

The rest of the application is straightforward.  Make sure you choose $500 and 60 months.  You will also be asked to choose the reason you want the loan from a menu of 20+ possibilities.  The reason you want is probably placed toward the end of the list and reads something like Building Or Rebuilding Credit. You will have to wait for a day or two after you finish the online application, and you will then get a call from the loan officer (LO) to finalize the loan.

Note: our current research indicates that there is only a soft pull (inquiry) for this loan when done via Alliant.  That has been confirmed by multiple people who applied during Jan-March 2016.   Some other similar lenders also use only a soft pull, though some might use a hard pull.  Even Alliant could change their internal process and make it a hard pull, so don't apply for this loan if a hard pull would be a huge problem for you.


*  *  *  *  *

 

 

STEP 3: FINALIZE THE LOAN WITH A LOAN OFFICER

1-2 business days after you finish your online application, you will receive an email from a Loan Officer (LO).  In the email the LO will invite you to give him or her a call to finalize the loan. 

When you do talk with the LO it should go very smoothly.  Most people report the conversation takes about a minute.  One of the things that the LO will ask you is when you want your first payment to be.  The LO will be setting up an autopayment (a "scheduled transfer") from your savings account to your loan account.  Be prepared for the question and have a day picked out in advance.  For example, if you applied for the loan on April 5th, and you are talking to the LO on the 7th, you might choose April 20th as the date (in which case your payment will always be scheduled on the 20th).  Or you could choose May 3rd for the first payment.  Same principle.

Do not object to the autopayment in your conversation with the LO.  It's their standard policy so just agree to it and give him/her a date.

 

UPDATE (09/09/2016): At least one person reports that the telephone conversation with the LO described above has been replaced by a pure email process, where Alliant announces you have been approved, etc.  Please consider posting a comment in this thread if that is your experience too, or if by contrast they still required you to have a phone conversation with the LO.

The LO will explain that he's about to email you a bunch of documents electronically (after he hangs up).  Actually he'll email you a link to a portal where you can read and sign them.  It's all straightforward.  Most people just sign them and are done with it in a few minutes.

An hour later you will have the $500 loan deposited in your account.  Thus your account will have a little over $1000 in it, of which $500 is frozen and inaccessible.  As you pay down the principle on the loan, a corresponding amount will get unlocked and become "available."


*  *  *  *  *
 

STEP 4: PAY IT DOWN.

To start with, you will want to make sure you locate where the new loan account is on your online banking portal.  Just log in to the Alliant portal with your username and password and you will by default be taken to the Account Summary page.  You will now see your Share Secure Loan as a new account, along with the Savings account that you are used to seeing.

You will see a DUE DATE and PAYMENT AMOUNT for that loan.  For example, the due date and payment amount might be May 9 and $9.19.  Write both of those down (whatever the date and amount are).  Hopefully you chose a date that is maybe 7-10 days from when the loan was approved.  Later is fine too. 

Next you want to locate the Autopay that was set up by the loan officer.  To do that, go to the TRANSFER MONEY tab at the top of the page.  Then look to the far right margin.  You will see several links.  Look for the one that says Scheduled Transfers.  Click on that.  You will be taken to a page that shows an automated transfer from the Savings account to the Loan account.  That's a way of automatically paying the amount due each month.  Do not try to delete it or change it.  You can't do that -- yet.  The test cases we have done so far seem to indicate that you need to pay it ahead a good bit AND also wait for the first transfer to go through before it will permit you to delete the transfer.

Next pay off a good chunk of the loan.  Personally, I would start with something really simple.  Like pay off $420 of the loan amount ($500).  Your eventual goal is to get it down to just under 8.99% (i.e. a loan balance of $44).  But more than one person has reported that it can take a few months to get the autopay turned off and then confirm that it is really turned off.  So if you start with $420 you should still have a good buffer if a few more autopayments go through.

The way to make a payment (whether big or small) is to go to the TRANSFER MONEY tab.  Just set up a one time transfer of $420 from your savings to the loan.  Simple. 

When you have executed that, go back to the Account Summary page.  You will see that the Current balance is very low -- around $80.  You will also see that the Due Date has been pushed out way WAY into the future.

The next steps are easy. 

(a)  Wait for the first autopay to go through.  If the autopay has changed so that the next "scheduled transfer" date has been pushed way ahead in time, ignore that.  It is likely that your autopay will still go through on the first date that you agreed to.  Wait until a couple business days AFTER that date.  Then look in your savings account.  You should see that the payment still went through.  Your loan balance is now smaller, maybe $71 or so.

(b)  Now go back to that recurring transfer that your loan officer set up.  If you try to delete the autopay before it has gone through once, most people report getting a big red error message.  So now that you have waited till after the first autopay, you can delete it.  Just click DELETE.  It will ask you if you are really sure.  Say yes. 

Your autopay should now really be deleted.  Note that some people have reported success at deleting the autopay a day before the first autopay was scheduled to go through (the big red error message seems to vanish the day before, roughly).  But that may require more work and careful timing than you care to invest.  That's why the guidance above gives a way that is guaranteed to work: wait till after the first autopay goes through, then delete. 

(c)  Make a final payment to bring your loan balance down to $44.  Your amount owed will then be < 9% of the original amount, which is what this technique is all about.

Finally, you'll need to figure out a plan for keeping your loan and your savings account "active" so that they do not receive a fee for standing inactive/dormant for a long time.  Here are some options: 

*  MANUAL.  Just remember to sign on to your Alliant account and manually initiate a transfer of $2 every six months from your savings account to your loan account.  If you are confident you'll remember, that's simple and easy. 

*  AUTOMATIC: Use billpay from a checking account to make a $2 payment to your loan every three months.  The checking account can be an Alliant checking or one from an external bank.  If it is an external bank, you should also set up a billpay to your Alliant savings account to keep it active as well.  Note that, because you have deleted your monthly autopay, Alliant seems unwilling to let you set up another autotransfer from savings to loan.  So if you want to go the automated route, you'll need to use a checking account.

Regardless of the approach you choose, sign in once a year to make sure things are going OK.  You may need to tweak your payments a tiny bit, especially toward the end.  It's very important for your payment plan to avoid paying off the loan way earlier than you intended, but also important not to make such small payments that you eventually fall behind Alliant's schedule for paying off the loan.

FINAL NOTE: Many savings accounts have a maximum number of six withdrawls that can be made monthly without incurring a penalty (federal law).  This has no practical impact for this technique, unless you decide in the first month or two that you want to experiment with several smaller payments.  Always keep the total number of payments to five or less each month.  Of course, the appeal of the approach is you only really have to make one big payment and then you are set for a very long time.


*  *  *  *  *
 

STEP 5: WAIT FOR THE LOAN TO REPORT

If you don't have a tool that allows you to pull your credit reports for free at least once a month, you should probably get one.  Credit Karma is a good cost free choice, though you can ignore their scores and any recommendations they give you.  It's hard to beat as a free method for seeing your reports, which Karma will give you as often as once a week.

Look for your loan.  Alliant reports all its loans for all consumers to the three credit bureaus on the last day of the month,  In theory if the LO finalizes your loan at least three business days before the end of the month, it would likely be reported at the end of the month.  That seems plausible anyway.  But it's also possible that they have to do some extra housekeeping before it reports the first time. 

 

Remember too that just because Alliant reports your loan to the credit bureaus on a certain date, it could take 3-4 business days before it appears on a particular bureau's report.  Some people here on the forum have experienced longer wait times than that for all kinds of accounts.  Just depends on the CRA, what its servers are doing, etc.

 

Finally, if you need the reported balance to also be low, you should make sure that the new balance has fully registered a few business days before the end of the month -- just like with a credit card or any other account.

If you are really interested in how much benefit the loan will give you, you should get your credit profile looking as good as possible before you apply for the loan.  Most importantly you will want your profile to be stable -- in other words you want it to look the same before and after except for the new loan.  The same total CC utilization, the same number of cards reporting a balance, etc.  Otherwise you can't know, when your score changes, how much of the change is the loan and how much of it is something else.
 
FINAL THOUGHTS:

 

The approach as outlined above should enable you to do this painlessly and without involving a customer service rep at Alliant.  (The exception being when you talk to the loan ofice for one minute a few days after you apply online.)

 

Avoiding bothering the CSRs is good policy when you can, especially when you are doing something clever like this.  It's absolutely fully legal and fully within Alliant's loan terms, but it's probably also a good idea to minimize the extent to which you are pushing it onto the CSR's radar.  Some people here have run into CSR's limiting their options when they do that.

 

Many thanks to all the people here at the Forum who have pioneered this approach in 2015, especially Revelate.

New Member
Posts: 7
Registered: ‎03-20-2016
0

Re: Adding an installment loan -- the Share Secure technique

this is great ! thank you !

 

Im going to have to wait 3 months to pay off my 1k installment loan and then i will try this . lol

 

thanks once again !!!

Frequent Contributor
Posts: 422
Registered: ‎01-21-2016

Re: Adding an installment loan -- the Share Secure technique

Excellent! Very thorough! Consolidates all of the wisdom found in the various threads on this topic and then some.

 

I wish I'd had this guide when I went through the process!

Moderator
Posts: 16,956
Registered: ‎12-30-2011

Re: Adding an installment loan -- the Share Secure technique

[ Edited ]

Thank you for the writeup CGID!

 

I always meant to make the original thread original post or two more user friendly to summarize the results found in the hundreds of following posts, but never got around to doing so.  I greatly appreciate your taking the time and effort to do this!

 

Only thing I'd note after a more comprehensive read through (mea culpa) is to note the bulk of the points in the FICO 8 model are from having an open installment loan, closed loans (or revolving accounts) don't seem to truly be relevant from a scoring perspective; whether this is labelled credit mix or simply the FICO 8 implementation is pretty much impossible to state.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 693, TU 4 742, EX 2 702, EQ 8 722, TU 8 757, EX 8 737 (5/13/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Contributor
Posts: 101
Registered: ‎03-07-2016
0

Re: Adding an installment loan -- the Share Secure technique

Thank you so much for this in-depth guide!  I will definitely be looking into doing this very soon!


Contributor
Posts: 101
Registered: ‎03-07-2016

Re: Adding an installment loan -- the Share Secure technique

I have begun my journey into the SSL world.  I followed the in-depth guide and opened a savings account with Alliant this afternoon.

 

Made a $10 donation, deposited $510 into the savings account from my external checking account, set up my security questions/answers, and verified my e-mail address.  Once the funds are deposited into the savings account by next Monday or so, I will apply for the loan.

 

My Not So Brief History

 

Due to my situation, especially with recently closed credit card account and now 3 new credit cards within the last 2 months (Chase Sapphire Preferred, AMEX Blue Cash Everyday and now Barclaycard Arrival World), my FICO score took a big dip, most probably due to drop in Average Age of Account.  Since I am using the CSP card for my business expense, I am not confident about keeping that card's utilization below 10%, but I figured that starting up a history with an installment loan would help me in the long run.  SInce I am not looking for a new credit card until at least October or November of this year, I am hoping that everything will stabilize by then.

 

I will post updates as they come, so hopefully others who decide to follow this path can use them as data points.

 

Thank you again!


Frequent Contributor
Posts: 422
Registered: ‎01-21-2016
0

Re: Adding an installment loan -- the Share Secure technique

Sounds good, Absolution. Looking forward to reading your updates.

 

Regarding keeping your utilization down, you probably know this, but you can charge as much as you want on the card as long as you pay down the balance before the statement closes. Whatever is one the statement is what reports (with most credit card issuers, that is). Of course, if you need to wait for reimbursement from your employer (or for accounts receivables to come in, if it's it's your business) before you can pay it down, that's another story.

 

One thing to keep in mind, too, is that since you say you're not looking to app for a new credit card until later this year, it's not all that important to have your utility low in the mean time (at least in terms of your FICO scores, that is). As long as you get your utility optimized a month or so before you app, you will get the full benefit at that time.

Contributor
Posts: 101
Registered: ‎03-07-2016
0

Re: Adding an installment loan -- the Share Secure technique


Plip wrote:

Sounds good, Absolution. Looking forward to reading your updates.

 

Regarding keeping your utilization down, you probably know this, but you can charge as much as you want on the card as long as you pay down the balance before the statement closes. Whatever is one the statement is what reports (with most credit card issuers, that is). Of course, if you need to wait for reimbursement from your employer (or for accounts receivables to come in, if it's it's your business) before you can pay it down, that's another story.

 

One thing to keep in mind, too, is that since you say you're not looking to app for a new credit card until later this year, it's not all that important to have your utility low in the mean time (at least in terms of your FICO scores, that is). As long as you get your utility optimized a month or so before you app, you will get the full benefit at that time.


UPDATE:  Transfer from my external checking account into Alliant savings account has been completed, though Alliant savings account only shows my funds as current, but not available yet.  I anticipated, from the guide above, that it might take an extra day or two to have the funds become available, so it definitely looks like next Monday or Tueday will be the day I will apply for the loan.

 

Regarding the report date of balances, my situation is weird right now.  Chase reported to the bureaus after the 1st statement was cut 3 weeks ago.  Meanwhile, AMEX, which already had its 1st statement cut on the 17th, has yet to report anything.  Barclay, at the other end of the spectrum, reported immediately after I applied.  Funny thing is, I have yet to receive the Barclaycard in the mail yet!  I am not sure when these 2 banks are going to regularly report balances at this point.  I'd prefer all these accounts plus this loan to report all within a 10-day period, so that it would be easier for me to manage the balances when the time comes for a new application.

 

Thank you for the heads up!  I am very curious as to how all of this will pan out.  Hoping to recover my scores back up to where I was at end of January, by the time I plan to apply for a new card in October or November....

 

QUESTION: Can you be an authorized user on a specific card brand AND apply and own the same specific card brand at the same time?


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