topic Re: Should I do a 2nd secured personal loan? in Understanding FICO® Scoring

Should I do a 2nd secured personal loan?

Anonymous — Tue, 04 Oct 2016 15:10:19 GMT

So I opened a secured personal loan as part of my rebuild and it gave me a 15 point increase for TU and EQ but something I didn't find out until a 45 days after I opened it is that the CU I did it with does not report to Experian which is where I actually need the most work it's my lowest score and a lot of creditors use them.

So I'm wondering should I do another secured personal loan to help my Experian or not?

Pros and Cons

Re: Should I do a 2nd secured personal loan?

Anonymous — Tue, 04 Oct 2016 22:19:08 GMT

Bump

Re: Should I do a 2nd secured personal loan?

SouthJamaica — Tue, 04 Oct 2016 22:59:33 GMT

@Anonymous wrote:
So I opened a secured personal loan as part of my rebuild and it gave me a 15 point increase for TU and EQ but something I didn't find out until a 45 days after I opened it is that the CU I did it with does not report to Experian which is where I actually need the most work it's my lowest score and a lot of creditors use them.

So I'm wondering should I do another secured personal loan to help my Experian or not?

Pros and Cons

I would wait. I have never had anything that didn't report to all 3 bureaus.

Re: Should I do a 2nd secured personal loan?

Anonymous — Tue, 04 Oct 2016 23:54:13 GMT

I contacted the credit union and they said they do not pay to report to Experian only to TU and EQ so...?

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 05 Oct 2016 01:35:00 GMT

Hey Matt. How much was your personal loan for? And of that how do you currently owe?

Also, is your personal loan the only open installment loan you have? No auto loan, student loan, mortgage, etc?

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 05 Oct 2016 01:42:50 GMT

The secured PL was for $600 at 24 month term. I owe $525 of that currently.

If I did another one it'd be for $500 at 12 months with a different CU.

I do have student loans but they're deferred for the next 18 months while I'm in school so the bureas show them as closed status while in deferment. Which is why I think I got a 15 point boost after this one was added to 2/3 reports.

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 05 Oct 2016 01:58:09 GMT

What you should be aiming for is a personal loan for which you can

(a) Pay off most of the balance very early in the life of the loan, while

(b) Still keeping the loan open for a long time (e.g. five years)

Here is some guidance that explains how all this works, why paying it down early is best, why keeping it open a long time is best, etc. It also gives you a well tested lender and step by step guidance for how to get that loan.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

Read the first two posts, and that should give you the tools for deciding whether you want to pursue it further. If you do, read the instructions in the third post.

The estimated scoring advantage is typically a total of 30-35 extra points (but that includes the 15 you already got).

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 05 Oct 2016 02:00:33 GMT

Do you know whether your current personal loan involved a hard inquiry? The lender we recomend only does a soft pull.

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 05 Oct 2016 02:09:41 GMT

Okay I'll look through that thanks! And yes the first one was a HP on TU

Re: Should I do a 2nd secured personal loan?

CreditMagic7 — Wed, 05 Oct 2016 08:02:50 GMT

@Anonymous wrote:
What you should be aiming for is a personal loan for which you can

(a) Pay off most of the balance very early in the life of the loan, while
(b) Still keeping the loan open for a long time (e.g. five years)

Here is some guidance that explains how all this works, why paying it down early is best, why keeping it open a long time is best, etc. It also gives you a well tested lender and step by step guidance for how to get that loan.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

Read the first two posts, and that should give you the tools for deciding whether you want to pursue it further. If you do, read the instructions in the third post.

The estimated scoring advantage is typically a total of 30-35 extra points (but that includes the 15 you already got).

^This

And it really DOES make a difference!

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 05 Oct 2016 15:48:18 GMT

Let me ask - Even if I pay off a majority of the loan balance early on won't the minimum payment due still be whatever it initially was set at?

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 05 Oct 2016 16:16:25 GMT

@Anonymous wrote:
Let me ask - Even if I pay off a majority of the loan balance early on won't the minimum payment due still be whatever it initially was set at?

That varies according to the lender. With the lender we use as a case study (Alliant) making a huge lump-sum payment early in the life of the loan causes the "due date" for the next payment to be pushed way into the future. As the guidance reads (in "STEP 4: PAY IT DOWN")

Next pay off a good chunk of the loan.... When you have executed that, go back to the Account Summary page. You will see that the Current balance is very low.... You will also see that the Due Date has been pushed out way WAY into the future.

The bottom line is that you may wish to take the following approach, given your particular situation:

(1) Read through the first three posts of that thread.

(2) Add the Alliant loan and use the full tecnique as described in the instructions

(3) After the Alliant loan is completely paid down (to < 9%) then pay your other loan down to < 9%.

(4) Within a month your two loans should both be at < 9% and you will get the full benefit of the SS loan technique.

Two final notes:

(a) Your first loan (the non-Alliant loan) may pay off early as a result of paying it down. That's fine because your total installment utilization will still be < 9% because of your other loan.

(b) You will end up getting less of a bonus than you might have otherwise gotten (if you had use the SS loan technique with Alliant from the beginning). Your first loan involved a hard inquiry which you would have avoided, and also this way your AAoA is being lowered twice (with two new loans rather than once).

Still, on the whole you will end up being in substantially better shape than you are right now -- and there's no way to change the fact that you got the loan from the other place.

Re: Should I do a 2nd secured personal loan?

Anonymous — Tue, 18 Oct 2016 14:36:17 GMT

So I contacted a local CU asking if they report to the credit bureaus and which ones this is what they said,

"Hello Matt -

Thank you for the inquiry. This is a great question. No, Wings does not report to all 3 credit bureaus. The only one we report to is Experian.

Thank you."

This is the only one I need reporting to! Should I do it?

Re: Should I do a 2nd secured personal loan?

Revelate — Tue, 18 Oct 2016 16:02:47 GMT

@Anonymous wrote:
So I contacted a local CU asking if they report to the credit bureaus and which ones this is what they said,

"Hello Matt -

Thank you for the inquiry. This is a great question. No, Wings does not report to all 3 credit bureaus. The only one we report to is Experian.

Thank you."

This is the only one I need reporting to! Should I do it?

Why would you pay money (admittedly it shouldn't be very much) to get a positive tradeline on one bureau, when you can get it on all 3 bureaus for a similar amount?

Doesn't make much sense to me unless you're trying to wrap your arms around this one particular CU... and even then I would suggest diversity doesn't suck .

Re: Should I do a 2nd secured personal loan?

manyquestions — Tue, 18 Oct 2016 19:57:49 GMT

I'd just do Alliant.

Re: Should I do a 2nd secured personal loan?

newhis — Tue, 18 Oct 2016 23:07:33 GMT

If you do a 12 months secured loan with 500 and paying 4x a month, you will only get the most FICO points at the 11th month. Once paid, your score will drop.

That's why the better approach is to get a 48 or 60 months secured loan, pay it down and get the most FICO points for almost 4-5 years. Good luck.

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 19 Oct 2016 01:32:59 GMT

I think a 2nd one might hurt the other 2 scores considering I have a bunch of student loans but they show as closed because it's in deferment. That's why this one seems perfect because it only reports to the one bureau I need. Also there's no membership fee.

Re: Should I do a 2nd secured personal loan?

Revelate — Wed, 19 Oct 2016 03:03:05 GMT

@Anonymous wrote:
I think a 2nd one might hurt the other 2 scores considering I have a bunch of student loans but they show as closed because it's in deferment. That's why this one seems perfect because it only reports to the one bureau I need. Also there's no membership fee.

What CU charges a membership fee?

You're overthinking it: a positive tradeline isn't a bad thing in your case. Get the 5 year plan with Alliant and go on with life, 1 year on 1 bureau is simply lame if you're trying to improve your credit... and I'd suggest you wouldn't be considering this at all if you weren't doing that

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 19 Oct 2016 03:26:15 GMT

Not a membership fee per se but they make you make a donation to an organization.

1 year equals 11 years of positive history. Also I've read thru the Alliant plan I'm not sure if you've done it yourself but I made a large payment on my $600 secured loan (term 2 years) with another CU making it down to $100 but it only pushed the next payment due to May but by my calculations it should've been til next December or January is this the same as what happens with Alliant when you make the large initial payment as described in the plan?

My derogs are what's dragging me down I don't have enough money to PFD for three collections and I have an account with a 120 day late which is still hurting me

Re: Should I do a 2nd secured personal loan?

Anonymous — Wed, 19 Oct 2016 03:27:00 GMT

Good news is 2/3 and the 120 day late come off in 2018 not too far away so trying to build as much positive history as I can til then.