topic Re: What impact will a PLOC have on my credit?? in Personal Finance

What impact will a PLOC have on my credit??

DaWhole9 — Tue, 19 Apr 2022 21:06:26 GMT

I am pretty far along in my rebuilding process. My scores are 802 and 810. Up from 590-600. I have some decent credit cards now and about 45k available credit. About 1% utilization. I joined NasaFcu and got preapproved for $30k PLOC. Im wondering what effect this will have on my credit scores. I only have credit cards in my cresit history. No installment loans or mortgages. Will this help with variety? Will it increase my available credit helping my utilization even more? Will a personal loan be better for variety? Car loan?

Re: What impact will a PLOC have on my credit??

simplynoir — Tue, 19 Apr 2022 21:20:07 GMT

PLOCs are a revolving line of credit so they are scored the same as if you applied and were approved for a new credit card. They are not treated as loans like mortgages and auto loans as a few examples. Just wanted to make sure this is clear as you think about accepting the offer or choosing to pass on it

Re: What impact will a PLOC have on my credit??

DaWhole9 — Tue, 19 Apr 2022 21:36:01 GMT

Thank you! That's exactly the type of information I was looking for. So excepting this offer would be identical to getting a credit card with a $30,000 credit limit? What type of benefit to my credit score would an installment loan be?

Re: What impact will a PLOC have on my credit??

SouthJamaica — Tue, 19 Apr 2022 21:44:10 GMT

@DaWhole9 wrote:
I am pretty far along in my rebuilding process. My scores are 802 and 810. Up from 590-600. I have some decent credit cards now and about 45k available credit. About 1% utilization. I joined NasaFcu and got preapproved for $30k PLOC. Im wondering what effect this will have on my credit scores. I only have credit cards in my cresit history. No installment loans or mortgages. Will this help with variety? Will it increase my available credit helping my utilization even more? Will a personal loan be better for variety? Car loan?

It's treated just like a credit card. If you don't use it, it will just be reported as a revolving account with a 30k limit and a zero balance. So yes it will reduce your aggregate revolving utilization percentage.

I don't know for sure, but I believe it helps your credit mix, as it's a revolving account that is not a credit card.

With your superb scores, you should not add an installment loan for the "variety". You don't need it.

Yes it's possible you could pick up some points in your FICO 8's and 9's by getting an installment loan -- specifically a share secured loan from NFCU or PenFed -- and then paying it down to 9% of the original loan amount. But again, if I were you I wouldn't. I would keep things clean and simple. IMHO you're on your way to 850.

Re: What impact will a PLOC have on my credit??

DaWhole9 — Tue, 19 Apr 2022 22:03:09 GMT

"Account Diversity is a measure of how many different types of accounts (e.g. mortgages, credit cards, auto loans, etc.) are listed in your credit report. Lenders like to see that you have reasonable experience with various account types, as it illustrates that you have a broad financial skill set and can handle the unique demands of different financial instruments."

Thats from WalletHub as tips to improve my score. If that will inly be a few points it may not be worth it. Eventually i will get a mortgage.

Re: What impact will a PLOC have on my credit??

FinStar — Tue, 19 Apr 2022 23:19:33 GMT

@DaWhole9 wrote:
"Account Diversity is a measure of how many different types of accounts (e.g. mortgages, credit cards, auto loans, etc.) are listed in your credit report. Lenders like to see that you have reasonable experience with various account types, as it illustrates that you have a broad financial skill set and can handle the unique demands of different financial instruments."

Thats from WalletHub as tips to improve my score. If that will inly be a few points it may not be worth it. Eventually i will get a mortgage.

Relative to your profile, you may not see much in the sense of a score jump. Obviously, if you decide to take it, there will likely be some impact on your AAoA which can recover over time. As far as a credit mix, not much really as far as weight other than an increase in your overall available revolving credit.

Also, if you tap into your PLOC, keep in mind there is no grace period. Any draws begin to accrue finance charges the moment any transactions post to the PLOC. It's a decent cash flow instrument in the event you may need to use it wherever CCs aren't accepted, for instance.