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HiLine
Posts: 2,879
Registered: ‎10-19-2012
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Re: penalized for not having installment loan? what does this mean


ficonightmare wrote:

 

So unless you're ready to buy a home, and the extra points would really help lower your rate, i think it's kinda pointless to do.  Also, ultimately, you really can't say for certain what taking a loan, regardless how small would do for your score. Depending on what else FICO is reading in your file, it may hurt it. 


I think you got it backward. If you're buying a home soon, getting a new loan or any kind of credit account is a bad idea. You want your home purchase to be at least a year, ideally 2 years, from the last time you open a new credit account. If your score is already 760+, I agree that adding a new installment loan if you don't already have one will not help. But if your score is more in the 720's range, and you are shooting for 760 in a year or two, getting a loan for these last points to push you into the terrority is not a bad idea. 

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ficonightmare
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Re: penalized for not having installment loan? what does this mean

[ Edited ]

HiLine wrote:

ficonightmare wrote:

 

So unless you're ready to buy a home, and the extra points would really help lower your rate, i think it's kinda pointless to do.  Also, ultimately, you really can't say for certain what taking a loan, regardless how small would do for your score. Depending on what else FICO is reading in your file, it may hurt it. 


I think you got it backward. If you're buying a home soon, getting a new loan or any kind of credit account is a bad idea. You want your home purchase to be at least a year, ideally 2 years, from the last time you open a new credit account. If your score is already 760+, I agree that adding a new installment loan if you don't already have one will not help. But if your score is more in the 720's range, and you are shooting for 760 in a year or two, getting a loan for these last points to push you into the terrority is not a bad idea. 


No, I got it. Perhaps I should of been more clear. If you're getting ready to buy a home soon, in the next year or so (NOT in the next week or month. better?) I don't think paying interest, even on a small loan is a good idea.

 

In fact, none of us know what his score is gonna be in a year or two. it could shoot up to 760 easily with on time payments and low utility.

So to be totally honest,  giving someone advice to take out a loan, no matter how small, just for a fico boost, when no one even knows what this person's score will be when they're ready to buy, sounds crazy to me. 

 

And I bet bet my husbands favorite beer , that no financial advisor will tell you it's a good idea. 

 

 Mod edit- mild profanity

 


Starting Score: 600s
Current Score: EQ 08 798 on 5/28/14, TU 792 on 5/27/4 via Barclay, EX 798 on 5/28/14
Goal Score: 760


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HiLine
Posts: 2,879
Registered: ‎10-19-2012
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Re: penalized for not having installment loan? what does this mean

[ Edited ]

ficonightmare wrote:

HiLine wrote:

ficonightmare wrote:

 

So unless you're ready to buy a home, and the extra points would really help lower your rate, i think it's kinda pointless to do.  Also, ultimately, you really can't say for certain what taking a loan, regardless how small would do for your score. Depending on what else FICO is reading in your file, it may hurt it. 


I think you got it backward. If you're buying a home soon, getting a new loan or any kind of credit account is a bad idea. You want your home purchase to be at least a year, ideally 2 years, from the last time you open a new credit account. If your score is already 760+, I agree that adding a new installment loan if you don't already have one will not help. But if your score is more in the 720's range, and you are shooting for 760 in a year or two, getting a loan for these last points to push you into the terrority is not a bad idea. 


No, I got it. Perhaps I should of been more clear. If you're getting ready to buy a home soon, in the next year or so (NOT in the next week or month. better?) I don't think paying interest, even on a small loan is a good idea.

 

In fact, none of us know what his score is gonna be in a year or two. it could shoot up to 760 easily with on time payments and low utility.

So to be totally honest,  giving someone advice to take out a loan, no matter how small, just for a fico boost, when no one even knows what this person's score will be when they're ready to buy, sounds crazy to me. 

 

And I bet bet my husbands favorite beer that no financial advisor will tell you it's a good idea. 

 

 

 


Sounds crazy to you, I understand. I wouldn't bet your husband's favorite beer unless you really hate it, because there may be a financial advisor out there that is a frequent poster on this forum and has performed an appropriate cost/benefit analysis on the idea of taking an installment loan to improve FICO scores. Though I do agree most financial advisors will not recommend that their clients follow that path. Most of them are not as well-versed in credit profile as some of us here, and "us" probably includes you.

 

I am willing to pay $100 in interests to potentially save myself $30 per month in house payments on a 500k house. In fact, I've paid more than that to myFICO, and spent the number of hours worth many, many times over, to learn how to maximize my FICO scores for my auto loan and my future house. Is a small boost in FICO scores definitely going to give me more favorable rates? No. But even if there is a small chance, I'm willing to invest $100 for that chance to save myself 100 times the amount down the road.

 

 

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gen-specific
Posts: 297
Registered: ‎02-27-2013
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Re: penalized for not having installment loan? what does this mean

[ Edited ]

ficonightmare wrote:

HiLine wrote:

ficonightmare wrote:

 

So unless you're ready to buy a home, and the extra points would really help lower your rate, i think it's kinda pointless to do.  Also, ultimately, you really can't say for certain what taking a loan, regardless how small would do for your score. Depending on what else FICO is reading in your file, it may hurt it. 


I think you got it backward. If you're buying a home soon, getting a new loan or any kind of credit account is a bad idea. You want your home purchase to be at least a year, ideally 2 years, from the last time you open a new credit account. If your score is already 760+, I agree that adding a new installment loan if you don't already have one will not help. But if your score is more in the 720's range, and you are shooting for 760 in a year or two, getting a loan for these last points to push you into the terrority is not a bad idea. 


No, I got it. Perhaps I should of been more clear. If you're getting ready to buy a home soon, in the next year or so (NOT in the next week or month. better?) I don't think paying interest, even on a small loan is a good idea.

 

In fact, none of us know what his score is gonna be in a year or two. it could shoot up to 760 easily with on time payments and low utility.

So to be totally honest,  giving someone advice to take out a loan, no matter how small, just for a fico boost, when no one even knows what this person's score will be when they're ready to buy, sounds crazy to me. 

 

And I bet bet my husbands favorite beer, that no financial advisor will tell you it's a good idea. 

 

 

 




 

hey, thanks for the contributions to this thread

 

Although I can see how unfavorable certain advice would be such as anything involving "paying to play" for higher credit scores, I really appreciate the cost/benefit analysis people have posted on this thread

 

As I deal mainly with consequences this cost benefit analysis is worthwhile to me. 

 

Yes my scores will likely float around to 760 without any installment loans in the amount of time it takes for these loans to report as anything consequential. But given how fickle my scores have been I would like to do something to weight the average higher if I have control over it. (one small late payment on an account co-signed with a business dropped my score nearly 100 points, to recover nearly 100 points in 4 months, my first and only derogatory)

 

And Alliant is my first credit union account, an interesting experience

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gen-specific
Posts: 297
Registered: ‎02-27-2013
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Re: penalized for not having installment loan? what does this mean

[ Edited ]

Update: Just got my alliant "shared secured" loan approved and it is in my savings account

 

See you in 2019 lmao

 

 

So that was an odd experience, I was able to do everything on the phone and online (even signed the loan agreement on docusign.com on my mobile phone), so that part was great

 

the weird part was that the guy on the phone initially called me saying it was weird to ask for $500 secured loan for 5 years and that they wouldn't give it to me and that I would get a followup call on the decision in a day

 

So two days later (today) I called them back because I never got the followup call, and the guy was like "oh hey" and just sent me the loan terms and legal contract to my email, I signed it in docusign and the loan is in my account, and auto pay is already set up, he did it

 

:smileyvery-happy:

 

so whats next? a second installment loan? 

 

this was great because I was able to do this all in one week, any somehow my bank was able to do free electronic transfers in one day to fund alliant's savings account. saved a lot of time for a process like this

 

 

 

 

 

Citi Thank You Premier 60k, AMEX Blue 30k, Chase Sapphire Preferred 30k, BoA VISA Rewards 30k, Wells Fargo 30k, Barclays Arrival+ 20k, Citibank Custom Credit Line 12k, Macys/AMEX 2.5k/500

EFX 711, EXP 713, TU 713 - AVG 701 GOOD - May 2014
EFX ???, EXP ???, TU 764 - AVG 764 GOOD - Aug 2014
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Revelate
Posts: 8,979
Registered: ‎12-30-2011
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Re: penalized for not having installment loan? what does this mean

Hah nice!  I think I talked to one person (they called me asking what the loan was for... um, purely for FICO scoring purposes) and the process was painless as well, though they didn't blink at the 5 year bit in my case.

 

If I were you, I'd wait to see what occurred first with my score before adding another.  All in the name of FICO science :smileyhappy:.

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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gen-specific
Posts: 297
Registered: ‎02-27-2013
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Re: penalized for not having installment loan? what does this mean

[ Edited ]

maybe because I opened the account sunday, had the account funded by tuesday and immediately asked for a loan that was greater than the size of the account (after interest)

 

I can't tell if there was a hard pull or an inquiry of any kind involved though, doesn't matter

Citi Thank You Premier 60k, AMEX Blue 30k, Chase Sapphire Preferred 30k, BoA VISA Rewards 30k, Wells Fargo 30k, Barclays Arrival+ 20k, Citibank Custom Credit Line 12k, Macys/AMEX 2.5k/500

EFX 711, EXP 713, TU 713 - AVG 701 GOOD - May 2014
EFX ???, EXP ???, TU 764 - AVG 764 GOOD - Aug 2014
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Revelate
Posts: 8,979
Registered: ‎12-30-2011
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Re: penalized for not having installment loan? what does this mean

[ Edited ]

gen-specific wrote:

maybe because I opened the account sunday, had the account funded by tuesday and immediately asked for a loan that was greater than the size of the account (after interest)

 

I can't tell if there was a hard pull or an inquiry of any kind involved though, doesn't matter


There wasn't for me, SP only both for membership and for the secured loan.  Actually looking at the report it appears they used the same pull for both.

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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Ubuntu
Posts: 89
Registered: ‎05-02-2014
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Re: penalized for not having installment loan? what does this mean

@Revelate:

You mentioned much of this in your posts but I just want to clarify before I do something stupid and shoot my FICO in the foot.

You have a savings secured loan with Alliant.

There was not an HP for membership.

There was not an HP for the loan itself.

The loan reports to all three major bureaus.

The loan reports as an installment loan.

The loan does not report as secured.

Is all of that correct or only some of it?

 

@gen-specific:

Please do report back as soon as the loan hits you reports. I'd very much like to have a current view of how Alliant is reporting, what sort of pulls they're doing, and how many.  If all or most of the above is the same for you then I'll likely be getting one or two of these next month after my Amex app assuming all goes well with that.

 

I don't have any need for an installment loan in the near future but I'm sure I will at some point so it would be nice to get one or two aging now so they're established if and when I need to demonstrate installment creditworthiness.

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Revelate
Posts: 8,979
Registered: ‎12-30-2011
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Re: penalized for not having installment loan? what does this mean

For me all of that is correct except for two things:

 

1) It hasn't reported to EX *yet*, but it only just reported 3 days ago on SW and EX has been really slow for me on Credit Sesame lately, to the tune of a week or more behind CK even (which has been surprising quick the past two months, I can't pretend to understand this reversal in service quality between the two) but their other tradlines report there so I have no worries on that count I simply can't personally confirm it yet.

 

2) It does report as secured: which makes absolutely zero difference to FICO, and zero difference to me as a result.  Likely zero difference to underwriters anyway, mortgages and auto loans are both secured loans, and payment history is payment history.

 

I would note there wasn't a HP for me, that might not be everyone's case as there isn't a lot of recent anecdotal data that I've seen but I did find a few confirmations in other myFICO threads from other users on the subject.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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