topic Re: My personal review and experience with Self Lender in Personal Finance

My personal review and experience with Self Lender

folks19 — Tue, 15 Dec 2020 04:17:07 GMT

Hi all! I just finished paying off my Self Lender credit building loan (a bit early, I'll explain why), and I wanted to share my experience with this loan.

First, I think it's an amazing product. I was building credit for the first time, and I had just 1 secured card and no other accounts on my report. I wanted more accounts on my report, but I also wanted to work on the "credit mix" part and I wasn't buying a house or car in the near future, so I decided to apply for the Self loan.

When I applied, my Fico scores were at around 710, and they dropped to about 670 after the account reported because my AAoA dropped by half and a new loan with 0% payment has been reported. I knew that's normal, but it bothererd me a little. I was a little tempted to just close it, but I knew that's not worth it. This all was at the very begining of COVID-19, and after a few weeks I realized taht it won't be wise to apply for a credit card any time soon, so the score drop made no differnce to me anyway.

At arount September, I started to consider applying for a credit card, but my balance on my Self loan was still at around 50%, so I started to consider closing the account. I remembered reading on this forum that having your loan balance at less than 8.9% is the best for your score, so I decided to pay it down to that amount. Here's what I did:

My monthly payment was 48$ for 12 months, so i paid it all besides for for 1 payment + 1$ one day after the previous due date (meaning, 29 or 30 days early), and a month later (again, right after the previous due date) made the 48$ payment, and 2 months later minus 1 day (on the due date) I made a 1$ payment plus interest. by doing this, I was able to get my loan down to 9.8% and benifit from it for 3 months. I applied for 3 cards and got approved for all 3 during that time!

overall, I think Self is amazing. I have just one complaint, just one but major, and that is that Self won't let you prepay without reducing the loan amount. I mean that you should be able to apply for the 48$/12 months program (or another), and prepay 11 payments (or whatever you want/ can afford) right away and keep the loan open for the 12 months term and pay the rest when it's time. Currently, you can prepay, but that would reduce the term of the loan and you would still need to make the monthly payment the next month. Since Self is meant to help people build credit, they should design their product to be as helpful is it can. This is in their hands, and by allowing prepayments, they can really help people build credit sooner.

As I mentioned, I personaly didn't get this loan to establish credit but rather to help with my "credit mix". However, the Self loan is listed as a tool to build credit. It's only hinted in a few places that it's also helpful for people without any loans. I just want to remind anyone reading this taht if you don't have any loans on your report, applying for a loan like self would help you score.

Re: My personal review and experience with Self Lender

Anonymous — Tue, 15 Dec 2020 05:59:15 GMT

@folks19 wrote:
Hi all! I just finished paying off my Self Lender credit building loan (a bit early, I'll explain why), and I wanted to share my experience with this loan.
First, I think it's an amazing product. I was building credit for the first time, and I had just 1 secured card and no other accounts on my report. I wanted more accounts on my report, but I also wanted to work on the "credit mix" part and I wasn't buying a house or car in the near future, so I decided to apply for the Self loan.
When I applied, my Fico scores were at around 710, and they dropped to about 670 after the account reported because my AAoA dropped by half and a new loan with 0% payment has been reported. I knew that's normal, but it bothererd me a little. I was a little tempted to just close it, but I knew that's not worth it. This all was at the very begining of COVID-19, and after a few weeks I realized taht it won't be wise to apply for a credit card any time soon, so the score drop made no differnce to me anyway.
At arount September, I started to consider applying for a credit card, but my balance on my Self loan was still at around 50%, so I started to consider closing the account. I remembered reading on this forum that having your loan balance at less than 8.9% is the best for your score, so I decided to pay it down to that amount. Here's what I did:
My monthly payment was 48$ for 12 months, so i paid it all besides for for 1 payment + 1$ one day after the previous due date (meaning, 29 or 30 days early), and a month later (again, right after the previous due date) made the 48$ payment, and 2 months later minus 1 day (on the due date) I made a 1$ payment plus interest. by doing this, I was able to get my loan down to 9.8% and benifit from it for 3 months. I applied for 3 cards and got approved for all 3 during that time!
overall, I think Self is amazing. I have just one complaint, just one but major, and that is that Self won't let you prepay without reducing the loan amount. I mean that you should be able to apply for the 48$/12 months program (or another), and prepay 11 payments (or whatever you want/ can afford) right away and keep the loan open for the 12 months term and pay the rest when it's time. Currently, you can prepay, but that would reduce the term of the loan and you would still need to make the monthly payment the next month. Since Self is meant to help people build credit, they should design their product to be as helpful is it can. This is in their hands, and by allowing prepayments, they can really help people build credit sooner.
As I mentioned, I personaly didn't get this loan to establish credit but rather to help with my "credit mix". However, the Self loan is listed as a tool to build credit. It's only hinted in a few places that it's also helpful for people without any loans. I just want to remind anyone reading this taht if you don't have any loans on your report, applying for a loan like self would help you score.

The credit mix is what was most important. While paying it down to 8.9% is nice (think NFCU if you want to do that), the point is having an open installment loan on your CR. I lost all my credit mix points once it reported closed. Positive and consistent payment history is also important for new/thin files, so paying it off right away doesn't help that. Since Self is only 1-2 years long, that means getting a new account on your CRs every 1-2 years (or less when you pay it off early) if you do not have another installment loan like SL, auto, personal loan, or mortgage. This would continually lower you AAoA to keep credit mix going.

I liked my Self Lender and was sad when it ended since my scores dropped significantly when it was over, but my SLs were going to start reporting within 4 months of its close, so I opted to not do another. My SO's Self Lender lined up perfectly to transition from them to SLs reporting.

If they let you prepay, they would lose money on the intrest portion of the product, so while they are helping individuals (re)build their credit, they are a company after all and need to make money. This is why there are only a handful of places that still allow prepayment without shortening the term of the loan and the list seems to grow smaller.

I would go with the 5 year NFCU SSL if that is what you are looking for.

I personally would have stuck with it the whole 12 months, but we each make our own choice how to use credit products to benefit our needs. Congrats on finishing it and I wish you continued luck in building your credit profile!

Re: My personal review and experience with Self Lender

folks19 — Wed, 16 Dec 2020 03:28:32 GMT

@Anonymous I didn't say I would pay it all off right away but rather that I would keep it open until I'm ready to apply for a few credit cards and then pay it down to 8.9%. In my case, it was open for about 9 months out of 12, 3 of which I was below 8.9%. During those 3 months I applied and got approved 3 credit cards.

I know that applying for a lot of new accounts lowers my AAoA, but that's also part of why I want to get those cards now. By having more accounts when my credit age is low, I lower the affect of opening a new account in the future. Think of it this way: if you have 2 accounts with an average age of 3 years and you open another one, you just dropped to 2. On the other hand, if you have 10 accounts, you'll only drop by 2-3 months. The thing is that your AAoA will drop a lot if you open lots of new accounts later on, but if you open them while your profile is new, you can make up the difference in a few months at most, and as time goes on, you'll make up the diference sooner.

I'm also not desperate for credit now, so I can afford to do this. For someone who plans to take out a mortgage or some other loan, it's obviously not a good idea to apply for accounts they don't need. In my case, I'm actually using these cards for a small business and takeing advantage of SUBs.

Regarding the NFCU loan you have mentioned, I have heard of their credit building loan, but I'm not a NFCU member, and I'm eligible to become one.

Re: My personal review and experience with Self Lender

Anonymous — Wed, 16 Dec 2020 04:17:43 GMT

@folks19 wrote:
@Anonymous I didn't say I would pay it all off right away but rather that I would keep it open until I'm ready to apply for a few credit cards and then pay it down to 8.9%. In my case, it was open for about 9 months out of 12, 3 of which I was below 8.9%. During those 3 months I applied and got approved 3 credit cards.
I know that applying for a lot of new accounts lowers my AAoA, but that's also part of why I want to get those cards now. By having more accounts when my credit age is low, I lower the affect of opening a new account in the future. Think of it this way: if you have 2 accounts with an average age of 3 years and you open another one, you just dropped to 2. On the other hand, if you have 10 accounts, you'll only drop by 2-3 months. The thing is that your AAoA will drop a lot if you open lots of new accounts later on, but if you open them while your profile is new, you can make up the difference in a few months at most, and as time goes on, you'll make up the diference sooner.
I'm also not desperate for credit now, so I can afford to do this. For someone who plans to take out a mortgage or some other loan, it's obviously not a good idea to apply for accounts they don't need. In my case, I'm actually using these cards for a small business and takeing advantage of SUBs.
Regarding the NFCU loan you have mentioned, I have heard of their credit building loan, but I'm not a NFCU member, and I'm eligible to become one.

I wasn't speaking of the credit cards, merely the installment loans, that if one were to consistently get a Self Lender loan and pay it down to maintain both low installment utilization and credit mix, that would require a lot of new accounts - one every several months - which wohld hit AAoA quite hard.

I did say we all do what we need to do to reach our credit goals and we all take different paths. I was just stating with a new profile it might be good to show a consistent payment history and rige it out naturally, not that you had to, but is what I personal would and did do, even though it was tempting to pay it down straight away for the extra points. I eventually got there naturally and it was nice while it lasted, but I have since lost the low installment utilization and credit mix points once itbreported closed. I opted to not get another one since I would have SLs reporting in short order.

NFCU appears to be an amazing institution that offers exactly what you seek in an installment loan, so if you can become a member, as you said you are eligible, it is definitely something worthwhile to consider! If you are good to them they can be an amazing resource for credit products and basically connot be compared to other banks in regards to their generosity.

We all do what we must to reach our credit goals. Again, continued luck in your credit build and building your new small business!

Re: My personal review and experience with Self Lender

folks19 — Wed, 16 Dec 2020 05:14:49 GMT

@Anonymous wrote:
@folks19 wrote:
@Anonymous I didn't say I would pay it all off right away but rather that I would keep it open until I'm ready to apply for a few credit cards and then pay it down to 8.9%. In my case, it was open for about 9 months out of 12, 3 of which I was below 8.9%. During those 3 months I applied and got approved 3 credit cards.
I know that applying for a lot of new accounts lowers my AAoA, but that's also part of why I want to get those cards now. By having more accounts when my credit age is low, I lower the affect of opening a new account in the future. Think of it this way: if you have 2 accounts with an average age of 3 years and you open another one, you just dropped to 2. On the other hand, if you have 10 accounts, you'll only drop by 2-3 months. The thing is that your AAoA will drop a lot if you open lots of new accounts later on, but if you open them while your profile is new, you can make up the difference in a few months at most, and as time goes on, you'll make up the diference sooner.
I'm also not desperate for credit now, so I can afford to do this. For someone who plans to take out a mortgage or some other loan, it's obviously not a good idea to apply for accounts they don't need. In my case, I'm actually using these cards for a small business and takeing advantage of SUBs.
Regarding the NFCU loan you have mentioned, I have heard of their credit building loan, but I'm not a NFCU member, and I'm eligible to become one.
I wasn't speaking of the credit cards, merely the installment loans, that if one were to consistently get a Self Lender loan and pay it down to maintain both low installment utilization and credit mix, that would require a lot of new accounts - one every several months - which wohld hit AAoA quite hard.

I did say we all do what we need to do to reach our credit goals and we all take different paths. I was just stating with a new profile it might be good to show a consistent payment history and rige it out naturally, not that you had to, but is what I personal would and did do, even though it was tempting to pay it down straight away for the extra points. I eventually got there naturally and it was nice while it lasted, but I have since lost the low installment utilization and credit mix points once itbreported closed. I opted to not get another one since I would have SLs reporting in short order.

NFCU appears to be an amazing institution that offers exactly what you seek in an installment loan, so if you can become a member, as you said you are eligible, it is definitely something worthwhile to consider! If you are good to them they can be an amazing resource for credit products and basically connot be compared to other banks in regards to their generosity.

We all do what we must to reach our credit goals. Again, continued luck in your credit build and building your new small business!

Thank you!

I didn't mean in any way to say that you're wrong. I was just explaining why I did what I did. If i wasn't planning to apply for 3 credit cards, I would have left Self open.

You also seemed to imply that you lose the credit mix points once the loan is paid off. I didn't think that's the case, but I could ne wrong.

I also didn't mean to say that I would continue applying for Self every 3 months, but rather that I would apply and pay it down before applying for a credit card. It sould be open for at least 7 months, likely more. And I won't be doing this for ever because eventually, I would be applying for loans I actually need, like an auto loan.

If you have any idea how to join NFCU, please share it with me. I didn't serve nor did any of my relatives.