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Moderator
Posts: 16,300
Registered: ‎12-30-2011

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

[ Edited ]

Any "negative" should be taken as early as possible to minimize the long term effects.  In this case if you're going to take a hit to your AAOA disregard the short-term effects and only consider the long ones.

 

More concretely, don't look at the calculation now, or any point before 2018: look at immediately after on the assumption you open up no new accounts, and then look at it if you open call it 3 credit cards and the installment loan right now.  If you wish to be more complete in the analysis, open up the 4 accounts in 2017 instead and compare that too.

 

Put simply you want to get the new tradelines as soon as possible mathematically, and get as many as possible of the pretty OK's racking up on the new tradelines before the old ones disappear.  This is really the whole FICO premise behind clustering applications, rather than spreading them out... you know you're going to need X accounts for FICO scoring, and you can qualify for them right now, so go get them right now.  

 

The only constant in FICO, much like life, is that time passes and any time not used passively racking up payment history is time lost from the algorithm perspective that we don't get back.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 693, EX 2 719, EQ 8 732, TU 8 732, EX 8 728 (2/01/17)
Goal Score:    EQ 5 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Posts: 43
Registered: ‎02-20-2016
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Re: Adding an installment loan -- the Share Secure technique

Hi Revelate,

 

I see. So since I applied for and was approved for an American Express Blue Cash Everyday card on 4-13-16, then I should try to get the additional 3 cards I want now to group the inquiries, take a score hit now, and then have time for my score to recover for a year or so when I want to make a mortgage application? My instinct was to space the applications for the credit cards out over time so it would not appear to credit grantors that I was loading up on credit too quickly. And that natural instinct, like so many others I have had about credit, appears to be wrong. Besides the AMEX hard pull on 4-13-16 I have only one other hard pull on my credit reports: one from February 2015 when I rented an apartment for my girlfriend in Minnesota while she was getting long-term medical care at the Mayo Clinic there. My deposit to Alliant Credit Union should be available by tomorrow and I will apply for the installment loan then but its likely to be a soft pull. So I don't think I have excessive pulls now. And the most recent balance on my sole existing credit line, a card at Bank of America which was reported to the credit bureaus is about $600, with a limit of $30,000. So I don't think I have any over utilization. The recent AMEX account, with its $25,000 limit, has not yet reported so I don't have any newly opened accounts on my reports, just the hard pull from AMEX.

 

If the application grouping technique is the way to go, and it appears to be, then I am inclined to apply for an additional AMEX card, probably a Chase Sapphire Preferred, and one other that I haven't decided on and do so now. Any thoughts on this course of action, including the wisdom of applying for an additional AMEX card so soon after getting one?

Yapsalot
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Registered: ‎03-22-2012
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Re: Adding an installment loan -- the Share Secure technique

@yapsalot

 

You might consider getting 1 credit card from each of the so called "prime" lenders. They are the lenders that will grow with you for life and if not to start, eventually give you high credit lines. The so called "prime" banks are:

 

AMEX

Bank of America

CitiBank

Chase

Discover

Wells Fargo

 

I might suggest staying away from Wells Fargo because a lot of people on this forum seem to have issues with them.

 

With your current scores you should be approved for any credit card you apply for. Keep in mind that as more hard pulls show up on your credit report (They will show up immediately after you hit the apply button.) the next lender will still probably approve you but with a lower starting credit line. You want to apply for you favorite cards first and work down from there.

 

This will give you a diversified portfolio and you won't have to worry about running into a problem with one lender. What if 5 years from now a lender goes bankrupt or gets sold? What happens if a lender gets you angry for some reason and you would like to stop doing business with them? That is why you don't what to be tied too much to one lender.

 

I would highly recommend the Discover IT card. Discover has some of the best customer service in the credit card industry.


Starting Score: EQ 653 6/21/12
Current Score: EQ 738 8/5/16 - EX 828 8/5/16 - TU 739 8/5/16
Valued Member
Posts: 43
Registered: ‎02-20-2016
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Re: Adding an installment loan -- the Share Secure technique

Thanks Jamie123!

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

Is there any benefit to having multiple installment loans like this or would that possibly be negative?  I am wondering if I could find 3 banks or credit unoons that can do this type of loan and add 3 installment loans to my credit profile.  Due to joint debt on mortgage loans from the ex, I have many late payments from 2011-2012 reporting to my credit and was thinking maybe 3 loans reporting on time payments with less than 9% owed of the initial loan amount might help me?  I have 4 mortgages from the mid 2000s, a Macy's AU account from 1994 with 7% debt utilization on a $6,000 max available credit.

EQ 631 - FICO 8

TU 670 - FICO 8

EX 652 - FICO 8

 

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Posts: 16,300
Registered: ‎12-30-2011
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Re: Adding an installment loan -- the Share Secure technique

[ Edited ]

rellings wrote:

Is there any benefit to having multiple installment loans like this or would that possibly be negative?  I am wondering if I could find 3 banks or credit unoons that can do this type of loan and add 3 installment loans to my credit profile.  Due to joint debt on mortgage loans from the ex, I have many late payments from 2011-2012 reporting to my credit and was thinking maybe 3 loans reporting on time payments with less than 9% owed of the initial loan amount might help me?  I have 4 mortgages from the mid 2000s, a Macy's AU account from 1994 with 7% debt utilization on a $6,000 max available credit.

EQ 631 - FICO 8

TU 670 - FICO 8

EX 652 - FICO 8

 


If you have open installment loans which dominate the scoring profile, then the new installment loan is just more pretty OK's.  Not bad, but not much gained from your description.

 

If your installment loans are all closed, then go add one via this method... though it doesn't help to have additional as near as we can figure other than just file thickness: all my score adjustments when testing this were identical regardless of number of installment lines.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 693, EX 2 719, EQ 8 732, TU 8 732, EX 8 728 (2/01/17)
Goal Score:    EQ 5 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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

It took about 24 hours to be approved to become a member of Alliant Credit Union when I did the online application.  I am doing the installment loan process as outlined in this forum so I thought I could post what I experienced.  To all who created this process, thank you so much, it seems to be a really great idea.  I was going to do a loan through Lending Club for this specific purpose and I thank goodness Lending Club denied me as they charge 5 points to get the loan.  This method is much more cost effective by a long shot.  

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


rellings wrote:

It took about 24 hours to be approved to become a member of Alliant Credit Union when I did the online application.  I am doing the installment loan process as outlined in this forum so I thought I could post what I experienced.  To all who created this process, thank you so much, it seems to be a really great idea.  I was going to do a loan through Lending Club for this specific purpose and I thank goodness Lending Club denied me as they charge 5 points to get the loan.  This method is much more cost effective by a long shot.  


Glad this thread was able to help you.--

“I must confess that I lead a miserable life. For almost two years, I have ceased to attend social functions just because I find it impossible to say to people I am deaf. If I had any other profession, I might be able to cope with my infirmity; but in my profession, it is a terrible handicap.” - Ludwig Van Beethoven
Valued Member
Posts: 43
Registered: ‎02-20-2016
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Re: Adding an installment loan -- the Share Secure technique

Jamie 123

 

Yes, I agree with the idea of diversification. I signed up for an AMEX (one charge card and one credit card), Chase Sapphire Preferred, and Discover IT. I had a bad experience a few years ago with Wells Fargo too, so avoiding them this time. Already have a Bank of America and might get a CitiBank card at some time in the future. Feels much better knowing I have a  number of different cards. Thanks!

 

Yapsalot
Valued Member
Posts: 43
Registered: ‎02-20-2016
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Re: Adding an installment loan -- the Share Secure technique

Hi Revelate!

 

Followed the procedures for opening the Alliant savings account and it went very smoothly. Opened the installment account as well, again going very smoothly, thanks to the detailed instructions. Got an additional bonus too. Alliant is paying 1% on savings, which is double my existing bank's rate, so switched my savings to them as well. The rep was very friendly when I spoke to him by telephone to confirm the loan and they have great terms: free ATM's in their network and for machines outside of their network, they reimburse up to $20.00 per month for ATM fees.

 

Paid down the Alliant installment account immediately after opened and now the site shows my next payment due something like four years from now. Will wait till the first automatic withdrawal happens to cancel future auto payments.

 

Opened two card accounts with Amex, one with Discover and one with Chase. So now will have an installment loan and a total of 4 new revolving accounts reporting soon to improve my FICO score. Took a slight hit on my current FICO score with EX for the inquiries which I see as a small price to pay for the benefit of getting the additional credit lines reporting. Alliant did not do a hard pull even though they disclose in opening the account that they will obtain a credit report.

 

Thanks again!

Yapsalot

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