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Adding an installment loan -- the Share Secure technique

Regular Contributor

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


incubus24 wrote:

did this just now! now i await for the email. Smiley Happy 

 

edit: same day!?!? that was quick! 

 


Just a data point - they approved me for 48 at 3%. No idea why, I asked for 60. Several forum members reported strange replies from Alliant. I'm not the first, I'm not the last I guess...

Message 31 of 1,647
Community Leader
Senior Contributor

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

Hey SmartCredit.  Glad the guide turned out to be useful for you.  Thanks for the nice word.

 

You asked if Alliant is known to report the loans slowly.  I would not say that, though it might be true.  Any new account by any creditor -- mortgage, credit card, student loan, car loan, etc. -- can take a while to appear on reports, which is the same I suppose as saying how long it takes for the creditor to report it.  Some people see the Alliant loan appear on their reports in a couple weeks, some people it takes six weeks.  That seems like reasonably prompt reporting, though I am not an expert.

 

I think Plip had a theory about when Alliant tends to report their loans for the first time -- as if they tend to do it in monthly batches.  I'll ask him to chime in if I got him right on that.

 

When were you approved for your 48-month loan?  I am surprised to hear they switches yours from 60 to 48 without discussing it with you.

Message 32 of 1,647
Established Contributor

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


CreditGuyInDixie wrote:

Hi Incubus.  You certainly can do that.  Unlike a savings account, however, you can't put debt back into a loan once you have paid it down.

 

So what many people choose to do is to pay a lot of it off right away, but still leave enough debt so that one or two autopays could go through and still be above $44.  As you will see as you read the guidance, the DELETE button next to the autopay does not work at first.  You actually have to let the first autopay go through, wait for a day, and then delete it. 

 

In theory you could pay your debt down to $44, let the first autopay go through (another $9-10), and then delete it.  But now your balance is down to $35 and you still are signing on in a month to turn off your autopay. 

 

If a person is desperate to get every possible FICO point as fast as possible, then I would pay it down immediately.  But if you can afford to wait, it may make sense to pay it down once and then make the final much smaller payment once the autopay is turned off.


i paid $456. hopefully i'd be able to delete the autopay after the first auto.

 

*kinda bummed that the first auto is NEXT month and not this month. i asked if it can be moved this month, no dice. i need everything to be in tip-top shape when i app for a CC by june that's why maximizing it now (don't know when it'll report). besides alliant is my main banking now. i'd be able to keep track of things as im logging in almost everyday. i plan to pay $2/$3 every 3-6 mos.

 

thanks again!

wishlist: Paypal 2% CB PenFed 2% Power Cash Rewards \ BofW 3% CB Golden1 3% No Fastfood | gardening since Sept '17


FICO scores | Inq | AAoA: EX: 812 | 5 | 3yrs \ TU: 819 | 2 | 2yrs \ EQ: ? | 0 | 2yrs

Message 33 of 1,647
Regular Contributor

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

Thanks for the guide, I'll probably do this. 

 

I have a question. If I get the loan for 60 months and I want to pay it all within 2 years, can I do that? Will it affect my credit score?

Message 34 of 1,647
Community Leader
Senior Contributor

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

Sure, you can certainly pay off the entire loan after two years.

 

The whole point of the SS Loan Technique, however, is to create an open installment loan on a person's credit reports who did not have any open loans (and to pay most of it off but not all of it).  When you pay ALL of it off, it then becomes a closed loan, and you are back to having no open loans again, losing the benefit you gained.  Remember that you will be paying very little interest on this loan, once you have paid it down to $44 -- roughly 15 cents per month.

 

I suggest you read through the "overview" section again and most importantly the "theory behind the technique" section.

Message 35 of 1,647
Established Contributor

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

yep! you basically wanna get 'rid' of these from your fico factors. Smiley Tongue
*all i have are ALL credit cards! Smiley Very Happy

 

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wishlist: Paypal 2% CB PenFed 2% Power Cash Rewards \ BofW 3% CB Golden1 3% No Fastfood | gardening since Sept '17


FICO scores | Inq | AAoA: EX: 812 | 5 | 3yrs \ TU: 819 | 2 | 2yrs \ EQ: ? | 0 | 2yrs

Message 36 of 1,647
Regular Contributor

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

So if I do this. and my credit score goes up 20 points and after 2 years I pay it off. My score will drop 20 points?

and will the score increase more if I borrow more? Like 1000 or 10,000?

Message 37 of 1,647
Moderator

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


TOTORO88 wrote:

So if I do this. and my credit score goes up 20 points and after 2 years I pay it off. My score will drop 20 points?

and will the score increase more if I borrow more? Like 1000 or 10,000?


Pink: yes, FICO 8 and possibly FICO 9 (and FICO 98 too if you're ever interested in a mortgage).

Blue: no

 

There's no difference between a $500 share secured loan, a $2500 CD secured loan, a $16000 auto loan, and a $255,000 mortgage from direct experience and data testing: identical score shifts.

 

There's no reason to pay off the share secured loan at the 2 year mark, keep the tradeline open as long as possible for FICO goodness.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
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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Message 38 of 1,647
Super Contributor

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


Revelate wrote:

TOTORO88 wrote:

So if I do this. and my credit score goes up 20 points and after 2 years I pay it off. My score will drop 20 points?

and will the score increase more if I borrow more? Like 1000 or 10,000?


Pink: yes, FICO 8 and possibly FICO 9 (and FICO 98 too if you're ever interested in a mortgage).

Blue: no

 

There's no difference between a $500 share secured loan, a $2500 CD secured loan, a $16000 auto loan, and a $255,000 mortgage from direct experience and data testing: identical score shifts.

 

There's no reason to pay off the share secured loan at the 2 year mark, keep the tradeline open as long as possible for FICO goodness.


Revelate speaks very wisely to this.

 

If it might be of some help i'll share that after adding a single new loan (SSL) from Alliant CU to replace, yes replace, 2 other installment loans where i paid one off and the other one expired after meeting full 24 month term, (auto+personal), there is now only a single new open installment loan that since is been paid down to a FICO threshold which maximizes points to the favor of your credit profile

 

FICO score points realize a net positive gain from a rule pointed out that has to do with "amounts owed" category of the FICO mix segment.

 

On my particular profile 20+ points.

 

Keeping at least (1) open installment loan fully active triggers a category for the Mix percentage and then there's the "amounts owed" percentage that can nicely round things out in order to obtain the full benefit of what's available courtesy FICO's own rules.

 

 

 

 

Message 39 of 1,647
Community Leader
Senior Contributor

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

Yup, CM that's right.  As I know you realize, however, all those ideas are explained in the Theory Behind The Technique section.  That's why I suggested that our new friend TOTORO88 read that section carefully.  It's better for him to read that and thereby understand why the model is working the way it is, as opposed to asking "what will happen if I do _____" and take on faith whatever response he happens to get.

 

If he learns conceptually why things work a certain way, he'll be able to answer for himself lots of other scoring questions as they come up in his decision making.  All this stuff hangs together.  It's a bit like being on a website for cars, and somebody asking what will happen if I turn the wheel this way at this intesection?  You can answer every specific question that comes up, but you'd also be inclined to encourage him to learn conceptually how all these parts of the car work together.  That's better for him for a ton of reasons.

Message 40 of 1,647