crazy app spree and bizarro world of fico

[lord_kinbote]

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@jamie123 wrote:

5. Call them and they will set-up the loan while you are on the phone. Set-up auto payments directly from the savings account so you never have to worry about making payments! It will take care of itself and give you FICO points for the next 4 years!

You can actually take the $500 loan add $50 to it and do the same thing with SDFCU now! Then when you get the $500 loan from SDFCU you can put that back into your regular account. So you just opened up two $500 loans and it will cost you about $50 in interest over 4 years when all is said and done!

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Question, if the 500 in the savings account is frozen, how do you setup automatic payment from the savings account - with the extra 50 you put in?  and as you make payments more funds becomes available to apply to future payments?

[jamie123]

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@akula wrote:

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@jamie123 wrote:

5. Call them and they will set-up the loan while you are on the phone. Set-up auto payments directly from the savings account so you never have to worry about making payments! It will take care of itself and give you FICO points for the next 4 years!

You can actually take the $500 loan add $50 to it and do the same thing with SDFCU now! Then when you get the $500 loan from SDFCU you can put that back into your regular account. So you just opened up two $500 loans and it will cost you about $50 in interest over 4 years when all is said and done!

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Question, if the 500 in the savings account is frozen, how do you setup automatic payment from the savings account - with the extra 50 you put in?  and as you make payments more funds becomes available to apply to future payments?

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Yes, the payments come from the money in the savings account. You could take out a $500 loan with just $500 in the account but near the end of the loan you would run out of money to make the last few payments because of interest charges. That's why it is a smart move to put $50 extra in at the start in my opinion.

At the end of the loan you will end up with about $23 in the account.

Or you could have the $500 loan deposited in the savings account and let it sit there like I did. You will then end up with about $523 in the account at the end of the loan.

[lord_kinbote]

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@jamie123 wrote:

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@akula wrote:

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@jamie123 wrote:

5. Call them and they will set-up the loan while you are on the phone. Set-up auto payments directly from the savings account so you never have to worry about making payments! It will take care of itself and give you FICO points for the next 4 years!

You can actually take the $500 loan add $50 to it and do the same thing with SDFCU now! Then when you get the $500 loan from SDFCU you can put that back into your regular account. So you just opened up two $500 loans and it will cost you about $50 in interest over 4 years when all is said and done!

---

Question, if the 500 in the savings account is frozen, how do you setup automatic payment from the savings account - with the extra 50 you put in?  and as you make payments more funds becomes available to apply to future payments?

---

Yes, the payments come from the money in the savings account. You could take out a $500 loan with just $500 in the account but near the end of the loan you would run out of money to make the last few payments because of interest charges. That's why it is a smart move to put $50 extra in at the start in my opinion.

At the end of the loan you will end up with about $23 in the account.

Or you could have the $500 loan deposited in the savings account and let it sit there like I did. You will then end up with about $523 in the account at the end of the loan.

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Great, about to start the Alliant account setup.  One more question, is it better to have two installment loans vs one?  I noticed you stated that you opened two.  I liked your method of opening one with Alliant, and then yet another with a secondary credit union.  In my scenario, I am thinking Alliant and NASAFCU - since I now have a new relationship with them and already have a savings/cc account.  Someone previously stated NASAFCU has secured loans up to 5 years at 3.1% interest.  

[CreditDunce]

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@akula wrote:

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@jamie123 wrote:

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@akula wrote:

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@jamie123 wrote:

5. Call them and they will set-up the loan while you are on the phone. Set-up auto payments directly from the savings account so you never have to worry about making payments! It will take care of itself and give you FICO points for the next 4 years!

You can actually take the $500 loan add $50 to it and do the same thing with SDFCU now! Then when you get the $500 loan from SDFCU you can put that back into your regular account. So you just opened up two $500 loans and it will cost you about $50 in interest over 4 years when all is said and done!

---

Question, if the 500 in the savings account is frozen, how do you setup automatic payment from the savings account - with the extra 50 you put in?  and as you make payments more funds becomes available to apply to future payments?

---

Yes, the payments come from the money in the savings account. You could take out a $500 loan with just $500 in the account but near the end of the loan you would run out of money to make the last few payments because of interest charges. That's why it is a smart move to put $50 extra in at the start in my opinion.

At the end of the loan you will end up with about $23 in the account.

Or you could have the $500 loan deposited in the savings account and let it sit there like I did. You will then end up with about $523 in the account at the end of the loan.

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Great, about to start the Alliant account setup.  One more question, is it better to have two installment loans vs one?  I noticed you stated that you opened two.  I liked your method of opening one with Alliant, and then yet another with a secondary credit union.  In my scenario, I am thinking Alliant and NASAFCU - since I now have a new relationship with them and already have a savings/cc account.  Someone previously stated NASAFCU has secured loans up to 5 years at 3.1% interest.  

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My rule of thumb is 1 installment loan per 3 revolvers for best mix.  But that is just my guess.  Common knowledge says two open installment loans is better than one.  With FICO 08, the big drop we have been seeing is after the last installment loan is closed.  However, that was less true of FICO 04 (the model most mortgages use).   If nothing else, two secured installment loans allows you to stagger when the loans terminate.

[lord_kinbote]

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@CreditDunce wrote:

My rule of thumb is 1 installment loan per 3 revolvers for best mix.  But that is just my guess.  Common knowledge says two open installment loans is better than one.  With FICO 08, the big drop we have been seeing is after the last installment loan is closed.  However, that was less true of FICO 04 (the model most mortgages use).   If nothing else, two secured installment loans allows you to stagger when the loans terminate.

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Hmm, with that said what type of staggering do you recommend for two installment loans - a 4 and a 2?  and when 2 falls off, open another 4, and then when the first 4 falls off, another two?!

I just opened a savings account with Alliant, but now I am awating for them to make a deposit to my bank account so I can complete verification and transfer funds for the secured savings loan.  I am waiting for the same process to complete with NASAFCU.  

[CreditDunce]

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@akula wrote:

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@CreditDunce wrote:

My rule of thumb is 1 installment loan per 3 revolvers for best mix.  But that is just my guess.  Common knowledge says two open installment loans is better than one.  With FICO 08, the big drop we have been seeing is after the last installment loan is closed.  However, that was less true of FICO 04 (the model most mortgages use).   If nothing else, two secured installment loans allows you to stagger when the loans terminate.

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Hmm, with that said what type of staggering do you recommend for two installment loans - a 4 and a 2?  and when 2 falls off, open another 4, and then when the first 4 falls off, another two?!

I just opened a savings account with Alliant, but now I am awating for them to make a deposit to my bank account so I can complete verification and transfer funds for the secured savings loan.  I am waiting for the same process to complete with NASAFCU.  

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What is your goal?   If you are trying to prepare for a mortgage app in a few years, then I can see how it makes financial sense to pay interest for a secured installment loan.  In which case, you just need one.  Your mortgage will be a second installment loan.  Plus, any auto loans you pick up over the years will also count.

If your goal is to have a perfect credit score, I would go with a 4 or 5 year secured loan with whoever (pick the longest term they offer).  For the second loan go with DCU and a 10 year term. You will probably need to take out a loan for more than $500, though.   The longer you can keep the line open the better.   In 5 years, open another 10 year shared secured loan.

Once you get your perfect score, be sure to not apply for loans or mortgages.  One HP (as long as you dont' get a new TL) may allow you to keep your perfect score, but certainly not two HPs or a new TL of any kind.

It can also makes sense for people trying to rebuild from BK to open two shared secured loans, assuming the interest paid will be insignificant.  It may be years before they will be able to get a good rate for a mortgage or car.   Two old installment loans on their CR when the BK finally is removed can cause their credit score to shoot up to close to 800 overnight

[jamie123]

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@akula wrote:

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@CreditDunce wrote:

My rule of thumb is 1 installment loan per 3 revolvers for best mix.  But that is just my guess.  Common knowledge says two open installment loans is better than one.  With FICO 08, the big drop we have been seeing is after the last installment loan is closed.  However, that was less true of FICO 04 (the model most mortgages use).   If nothing else, two secured installment loans allows you to stagger when the loans terminate.

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Hmm, with that said what type of staggering do you recommend for two installment loans - a 4 and a 2?  and when 2 falls off, open another 4, and then when the first 4 falls off, another two?!

I just opened a savings account with Alliant, but now I am awating for them to make a deposit to my bank account so I can complete verification and transfer funds for the secured savings loan.  I am waiting for the same process to complete with NASAFCU.  

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I really don't think staggering is necessary. It just worked out that way for me because I didn't want to tie up $1000 for the 4 year loan at SDFCU.

Get the longest term $500 shared secured loan that you can at NASA FCU. This will build history and you won't have to worry about it for 4 or 5 years.

As all your accounts age this will really help with your AAoA so you won't ever have to worry about your AAoA again after the first 2 years.

By the way...

Congrats on all your approvals and really high CLs!

I'm curious. What do you have on your reports that merits 8 approvals for top tier cards with high CLs? High income? Black magic?

[lord_kinbote]

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@jamie123 wrote:

Congrats on all your approvals and really high CLs!

I'm curious. What do you have on your reports that merits 8 approvals for top tier cards with high CLs? High income? Black magic?

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Thanks, yeah it was quite a run.  I am curious if opening a new line of 73k is going to cause any of my lenders to lower my credit lines. I had no baddies but to be honest my credit has been dormant for some time.  I had the AU account that was only 2 years old.  I think my AAofA was about 8 years, but of course that has drastically changed with the 8 new accounts.  My income is around 118k a year, but none asked for verification - not even NASA for the 30k limit. I had 3 closed installment accounts, 1 closed mortgage account, 1 closed revolving and 1 opened revolving (AU).

[jamie123]

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@akula wrote:

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@jamie123 wrote:

Congrats on all your approvals and really high CLs!

I'm curious. What do you have on your reports that merits 8 approvals for top tier cards with high CLs? High income? Black magic?

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Thanks, yeah it was quite a run.  I am curious if opening a new line of 73k is going to cause any of my lenders to lower my credit lines. I had no baddies but to be honest my credit has been dormant for some time.  I had the AU account that was only 2 years old.  I think my AAofA was about 8 years, but of course that has drastically changed with the 8 new accounts.  My income is around 118k a year, but none asked for verification - not even NASA for the 30k limit. I had 3 closed installment accounts, 1 closed mortgage account, 1 closed revolving and 1 opened revolving (AU).

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Well, your mix of credit must just have been right and the six figure income helped a bit I'm sure. I can't remember the last time and perhaps it never happened that I've seen somone get 8 top tier approvals and 73K of CLs to start!

You are really lucky and have an awesome start to your credit journey!

Now...Think long and hard about ever closing even one of these cards. The idea is to have 5 to 8 credit cards that you can keep open for life. After 10 years, these 8 cards will have a combined history of 80 years! Your high scores will be rock solid as long as you don't make any late payments or do anything else stupid. After 2 years of history with these cards and your installment loans you will be able to get a loan for whatever your salary can bear without question.

[Revelate]

Just to add if you're playing the reindeer games of FICO Scoring with shared secured loans, you're going to want to open new ones before the old ones run out anyway.

Get them as long as possible.  CD: The interest is trivial on these loans, 4 year from Alliant is a yuppie foodstamp + $0.38 or so, and we pay nearly said yuppie food stamp for a single score pull from myFICO.  The whole point to doing it this way instead of going and getting a loan secured against a car or whatever is because the dollar amounts and therefore expenses are trivial.

Not certain where the 3:1 ratio comes, that may be somewhat normal in the market (just talking averages) but historically and currently from anecdotal reports, 2 open does appear to be a realistic minimum when we're talking mix of credit.  We did see drops when the second to last loan closed on FICO '04.  Like anything there's diminishing returns in FICO, and if there's no open installment loan, I heartily recommend tacking one on there at a minimum.

Mortgage time horizons if longer doesn't matter: the goal is the improve FICO over the long term, and payment history adds up over time, and the penalty for adding a new tradeline decreases over time... ergo, do it ASAP if you can be approved, and with near guarunteed approval from Alliant and SDFCU... well, now is a good time .