topic Re: Personal Loan: How to maximize positive impact on score in General Credit Topics

Personal Loan: How to maximize positive impact on score

Anonymous — Tue, 06 Dec 2016 19:44:20 GMT

I've recently been approved for a 20k loan for 3 years at a pretty good fixed rate via Sofi. I am having a very quick painless experience with them. Anyways, 3 years was their shortest term loan. I'll be in a position to pay back the full amount in a few months. They have no penalties for paying it off early as well. I don't hardly have any installment loan history on my report. My question is when is the optimal time to pay back the loan early? My initial plan is to payback half in about a month. Then about another 41% in the following month bringing the principal owed under 10%. I'm considering chopping up the remainder to finish around the 18 month mark. The rest of my credit report are all credit cards with about 1% utilization and no baddies. Advise would be greatly appreciated.

P.S. It is largely thanks to the community on this forum that my credit reports are looking good enough where I can actually get a personal loan from a bank AND a decent interest rate! Look at my starting scores in my signature!

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Tue, 06 Dec 2016 21:06:17 GMT

@Anonymous wrote:
I've recently been approved for a 20k loan for 3 years at a pretty good fixed rate via Sofi. I am having a very quick painless experience with them. Anyways, 3 years was their shortest term loan. I'll be in a position to pay back the full amount in a few months. They have no penalties for paying it off early as well. I don't hardly have any installment loan history on my report. My question is when is the optimal time to pay back the loan early? My initial plan is to payback half in about a month. Then about another 41% in the following month bringing the principal owed under 10%. I'm considering chopping up the remainder to finish around the 18 month mark. The rest of my credit report are all credit cards with about 1% utilization and no baddies. Advise would be greatly appreciated.

P.S. It is largely thanks to the community on this forum that my credit reports are looking good enough where I can actually get a personal loan from a bank AND a decent interest rate! Look at my starting scores in my signature!

Hello Foss! You write:

I don't hardly have any installment loan history on my report.

If that means that this is your only open installment loan, then I think your plan is fine, as long as you are comfortable paying interest on $2000 for 18 months. Another strategy would be to pay it down to 5%, then open a $500 SS loan with Alliant (and pay it down), then pay off the remainder of your big loan after the Alliant loan is in place and reporting. That will save you some money. A middle ground would be to pay it down to maybe 2% or so and plan to pay the whole thing off at month 13, but again with an Aliant loan in place prior.

This link gives you info about how installment utilization works (inside the FICO 8 model) and instructions for the Alliant loan:

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

Be sure to let us know whether you have another installment loan besides the big loan you have now. The advice you'll get will be different in that case.

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Tue, 06 Dec 2016 23:35:42 GMT

Out of curiosity what was the $20k loan for and since you seemingly have the ability (funds) to pay it off quickly, what was the purpose of the loan? If you purpose is simply to gain credit score points due to the presence of an installment loan, the share secure technique that CGID referenced above is honestly the best way to go as you'll achieve equal or better results with $500 than you could with $20k or more.

Re: Personal Loan: How to maximize positive impact on score

SouthJamaica — Wed, 07 Dec 2016 02:43:58 GMT

@Anonymous wrote:
I've recently been approved for a 20k loan for 3 years at a pretty good fixed rate via Sofi. I am having a very quick painless experience with them. Anyways, 3 years was their shortest term loan. I'll be in a position to pay back the full amount in a few months. They have no penalties for paying it off early as well. I don't hardly have any installment loan history on my report. My question is when is the optimal time to pay back the loan early? My initial plan is to payback half in about a month. Then about another 41% in the following month bringing the principal owed under 10%. I'm considering chopping up the remainder to finish around the 18 month mark. The rest of my credit report are all credit cards with about 1% utilization and no baddies. Advise would be greatly appreciated.

P.S. It is largely thanks to the community on this forum that my credit reports are looking good enough where I can actually get a personal loan from a bank AND a decent interest rate! Look at my starting scores in my signature!

If this is your only installment loan, the optimum FICO score strategy is to pay it down to $1800, then pay the rest down very slowly, dragging it out over the rest of the 3 year term.

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Wed, 07 Dec 2016 15:18:47 GMT

This is currently my only open installment loan. I had a small one in the past that is closed. I'm probably going to follow the leave $1800 to pay down over 13 or 18 months strategy. Outside of incurring additional interest, is there any difference between 13 or 18?

Also, I got this loan for some unexpected personal expenses coming up this month (not holiday shopping,) but I definitely expect to have it all back in the next 2-3 months max. I figure more installment history could help in addition. Sofi already disbursed the money to my account. I applied on Sunday, three days ago. I'm very happy with the turn around time, and they gave me the best rate and terms compared to every else.

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Wed, 07 Dec 2016 16:08:15 GMT

@Anonymous wrote:
This is currently my only open installment loan. I had a small one in the past that is closed. I'm probably going to follow the leave $1800 to pay down over 13 or 18 months strategy. Outside of incurring additional interest, is there any difference between 13 or 18?

You probably realize that one difference is that, with the 18 month approach, you'll have 5 more additional months before you'll need to take out an Alliant loan. I don't see this as a big advantage -- if you are going to need to take the Alliant loan anyway, whether you take it out at month 12 or month 17 is not a big deal in my view.

Another slight advantage with the 18 month approach is that, in roughly ten years, your loan will fall off your reports. With the 18 month approach, you will at that time have a five month period where you had an 11.1-11.5 year old account helping you with your AAoA. With the 12-month approach, the loan will drop off five months sooner. Again, a very slight advantage.

What you are probably thinking about is whether a computer algorithm or a human reviewer might like it better if it sees you had a loan that lasted 18 months vs. 13 months. Answer is that I don't know. 13 vs. 11? That makes sense because it is crossing a 1-year mark. But 13 vs. 18? Likely not. But as I say I can't say rather than just give a tentative opinion.

Whether you go with 18 or 13, I would figure out first whether there is some kind of minimum monthly payment you have to make once you do the huge paydown. Let's assume for a second that there isn't. In that case if I were you I would pay your loan down to a smaller amount than $1800. All you are getting there is the privilege of paying the bank interest. Instead I'd pay it down to (say) $500 and then make $31 payments for the rest of the loan. (The exact math I'd leave to you.)

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Wed, 07 Dec 2016 16:40:31 GMT

@Anonymous wrote:
Another strategy would be to pay it down to 5%, then open a $500 SS loan with Alliant (and pay it down), then pay off the remainder of your big loan after the Alliant loan is in place and reporting. That will save you some money. A middle ground would be to pay it down to maybe 2% or so and plan to pay the whole thing off at month 13, but again with an Aliant loan in place prior.

This link gives you info about how installment utilization works (inside the FICO 8 model) and instructions for the Alliant loan:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

Be sure to let us know whether you have another installment loan besides the big loan you have now. The advice you'll get will be different in that case.

Wow you guys really know what you're talking about! I didn't even realize how much there is to know. I Googled SS loan and nothing came up. Then I Googled SS loan Alliant and saw that this is a credit union loan? Does SS mean secured?

I know nothing about any of this, but am looking to improve my credit score. Currently, what's hurting me are credit utilization and I have 1 baddie (that I explained in my post about the inquiry that should be dropping off in a few months). I'm hoping to have all my credit cards paid off in 3 months (except the one I use for expenses to get 2% cashback and pay in full every month).

Does this imply that (after I pay off my credit cards) taking out a personal installment loan could help improve my credit score? I've heard of credit unions, but don't know what they are or how they work. My last installment was an auto loan that I paid off about 3 years ago. Hopefully, I won't need another one for a few years (I was planning to buy my next car used and outright). And I'll probably never have another mortgage.

Lastly, my question is how do you know so much? -lol. It sounds like you're in the business. How can I become more knowledgeable about improving my credit? I'm at 732 now (which if I understand it correctly is just about good), but my goal is to have an excellent FICO score. Are there any other tricks I should know about? How do I learn about them? Should I just read through this entire forum?

Thanks,

Re: Personal Loan: How to maximize positive impact on score

SouthJamaica — Wed, 07 Dec 2016 16:51:12 GMT

@Anonymous wrote:
This is currently my only open installment loan. I had a small one in the past that is closed. I'm probably going to follow the leave $1800 to pay down over 13 or 18 months strategy. Outside of incurring additional interest, is there any difference between 13 or 18?

Also, I got this loan for some unexpected personal expenses coming up this month (not holiday shopping,) but I definitely expect to have it all back in the next 2-3 months max. I figure more installment history could help in addition. Sofi already disbursed the money to my account. I applied on Sunday, three days ago. I'm very happy with the turn around time, and they gave me the best rate and terms compared to every else.

The longer you leave it open with a 9% or less balance, the longer it will have a positive effect on your score.

But let's not let the tail wag the dog. It's always better, in my book, to not owe money... regardless of w hat impact that has on your FICO score.

I'm glad you're happy with SoFi. They turned me down twice, so they'll never be hearing from me again.

Re: Personal Loan: How to maximize positive impact on score

SouthJamaica — Wed, 07 Dec 2016 17:03:44 GMT

@Anonymous wrote:
@Anonymous wrote:
Another strategy would be to pay it down to 5%, then open a $500 SS loan with Alliant (and pay it down), then pay off the remainder of your big loan after the Alliant loan is in place and reporting. That will save you some money. A middle ground would be to pay it down to maybe 2% or so and plan to pay the whole thing off at month 13, but again with an Aliant loan in place prior.

This link gives you info about how installment utilization works (inside the FICO 8 model) and instructions for the Alliant loan:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

Be sure to let us know whether you have another installment loan besides the big loan you have now. The advice you'll get will be different in that case.
Wow you guys really know what you're talking about! I didn't even realize how much there is to know. I Googled SS loan and nothing came up. Then I Googled SS loan Alliant and saw that this is a credit union loan? Does SS mean secured?

I know nothing about any of this, but am looking to improve my credit score. Currently, what's hurting me are credit utilization and I have 1 baddie (that I explained in my post about the inquiry that should be dropping off in a few months). I'm hoping to have all my credit cards paid off in 3 months (except the one I use for expenses to get 2% cashback and pay in full every month).

Does this imply that (after I pay off my credit cards) taking out a personal installment loan could help improve my credit score?

Your credit card utilization, and your installment loan utilization, are 2 separate things.

With credit cards it's optimum for your score to have all but one of your cards reporting at zero balance, with the other card reporting a small sub-10% balance. Credit card utilization takes into account at least 3 distinct factors: percentage of cards reporting a balance, any balance..... individual card utilization percentage.... aggregate utilization percentage.

With installment loan utilization it's optimum to have your aggregate open non-mortgage installment loan utilization at below 10% but more than zero. There are some knowledgeable folks who state, with some authority, that mortgages are subject to a different, more lenient, standard.

Closed installment loans don't count in FICO for some strange reason.

I've heard of credit unions, but don't know what they are or how they work.

Like banks, but more flexible, often have better terms. Some are highly restricted in membership, some are not.

My last installment was an auto loan that I paid off about 3 years ago. Hopefully, I won't need another one for a few years (I was planning to buy my next car used and outright). And I'll probably never have another mortgage.

Lucky you.

Lastly, my question is how do you know so much? -lol.

I've learned a lot in the MyFICO Forum, and from personal experience.

It sounds like you're in the business.

Don't I wish.

How can I become more knowledgeable about improving my credit?

Just what you're doing

I'm at 732 now (which if I understand it correctly is just about good),

It's very good

but my goal is to have an excellent FICO score. Are there any other tricks I should know about? How do I learn about them? Should I just read through this entire forum?

The low hanging fruit is in the stuff I've already told you.

Another way to pick up points is, of course, to get rid of negatives.

One way of trying to do that is simply sending the credit bureaus "verification letters" asking them to get verification of a negative item. Sometimes that will result in things being dropped.

But IMHO the easiest and best way to pick up points is (a) the passage of time + (b) not applying for new credit accounts. That's a skill I haven't yet mastered.

Thanks,

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Wed, 07 Dec 2016 17:26:40 GMT

Great response as always by SouthJ. A few more thoughts.

You write:

My last installment was an auto loan that I paid off about 3 years ago. Hopefully, I won't need another one for a few years (I was planning to buy my next car used and outright). And I'll probably never have another mortgage.

Could that possibly mean that you do have a mortgage now?

In these kinds of conversations, people will often say that they don't have any open installment loans, and then after several more posts we find out that they do have student loans or a mortgage. Just to be 100% clear, when we say "installment loan" that includes personal loans, mortgages, student loans, car loans, financing from Rooms To Go for the sofa you just bought from them, etc.

The SS loan technique only helps you if you have no open installment loans of any kind. If you have an open mortgage it's extremely likely the technique would not help you.

And SS there stands for Share Secure (which you also ask about).

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Wed, 07 Dec 2016 18:03:42 GMT

@Anonymous wrote:
Great response as always by SouthJ. A few more thoughts.

You write:

My last installment was an auto loan that I paid off about 3 years ago. Hopefully, I won't need another one for a few years (I was planning to buy my next car used and outright). And I'll probably never have another mortgage.

Could that possibly mean that you do have a mortgage now?

In these kinds of conversations, people will often say that they don't have any open installment loans, and then after several more posts we find out that they do have student loans or a mortgage. Just to be 100% clear, when we say "installment loan" that includes personal loans, mortgages, student loans, car loans, financing from Rooms To Go for the sofa you just bought from them, etc.

The SS loan technique only helps you if you have no open installment loans of any kind. If you have an open mortgage it's extremely likely the technique would not help you.

And SS there stands for Share Secure (which you also ask about).

No. I am not currently on any mortgage. I did have a mortgage when I was married, but my ex refinanced and my name was taken off of it. I currently rent and have no plans to buy another house (maybe a condo some day, but not for a few years). So for now, it's just the 3 credit cards. 1 that I use for all life purchases and pay in full every month. One with a 25% usuage, which I need to get off ASAP, and one that I used for a 0% balance transfer (to pay down the 2nd card) which is almost at 100% utilization that I also plan to have paid off within 3 months.

After that, I'd like to buy out a silent business partner and thought I might take out a personal line of credit (or a simple $20k loan) to do this. It would be cheaper than what I'm paying him now. That's neither here nor there (I'm not asking for business advice), but was curious if my taking out a $20k installment loan could help my FICO score if I could pay down most of the balance quickly enough.

Anyway, it's impressive how knowledgeable you guys are and I will take SouthJ's (and your) advice. Thanks!

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Wed, 07 Dec 2016 20:24:17 GMT

iwan2,

Off topic here, but what is your goal score in your sig lower than your current score?

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Wed, 07 Dec 2016 20:36:58 GMT

Great to hear, iwan2! My comments in green below.

@Anonymous wrote:
No. I am not currently on any mortgage. I did have a mortgage when I was married, but my ex refinanced and my name was taken off of it. I currently rent and have no plans to buy another house (maybe a condo some day, but not for a few years).

Very clear. Thanks. Then you would be a great candidate for the Alliant SS loan. I encourage you to read through the first couple posts in that thread, which I include again here for your convenience:

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

So for now, it's just the 3 credit cards. 1 that I use for all life purchases and pay in full every month. One with a 25% usuage, which I need to get off ASAP, and one that I used for a 0% balance transfer (to pay down the 2nd card) which is almost at 100% utilization that I also plan to have paid off within 3 months.

I think it is great that you are paying off all three cards (amazingly good choice) and then will be using one card moving ahead that you plan to pay in full each month (also amazingly good choice). PIF is the way to go. Just bear in mind that paying in full does not necessarily involve having a low utilization, which you should also be looking for. If you tell BBS or SouthJ what your credit limits are on all three cards (total credit limit) and your typical monthly CC spend, then they can let you know whether you are set or whether you need to take extra steps to keep your total util low.

After that, I'd like to buy out a silent business partner and thought I might take out a personal line of credit (or a simple $20k loan) to do this. It would be cheaper than what I'm paying him now. That's neither here nor there (I'm not asking for business advice), but was curious if my taking out a $20k installment loan could help my FICO score if I could pay down most of the balance quickly enough.

Your best plan would be first to pay down your cards, wait for the new paid-off CC balances to appear on your credit reports, and then take out a $500 SS loan with Alliant, using the technique as described in the guidance. Once you have executed all the steps listed in the guidance, your score will be much higher -- and then you can decide if you want to take out an unsecured 20k loan. That big unsecured loan should be purely about achieving financial goals for yourself -- it should NOT be about a credit scoring benefit. The way I suggested just now, you will already have achieved your credit score boost with the SS loan.

Anyway, it's impressive how knowledgeable you guys are and I will take SouthJ's (and your) advice. Thanks!

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Thu, 08 Dec 2016 06:36:42 GMT

@Anonymous wrote:
Great to hear, iwan2! My comments in green below.

@Anonymous wrote:

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

Thanks again for the link. I will definitely read that whole thread. Just a brief skimming looks like there's a wealth of information in it!

Just bear in mind that paying in full does not necessarily involve having a low utilization, which you should also be looking for.

I realize this, which is why after I pay everything off I'm going to switch to the credit card with the highest credit limit for my cost of living expenses. Currently, that's not what I'm doing, but only because I'm attempting to pay as little interest as possible. Once everything is paid down then I'll switch which card I use.

If you tell BBS or SouthJ what your credit limits are on all three cards (total credit limit) and your typical monthly CC spend, then they can let you know whether you are set or whether you need to take extra steps to keep your total util low.

Not sure if either are still paying attention to my comments (I didn't mean to hijack this thread). But one is a Citibank Mastercard, which has a $11,500 credit line (which currently has a $2800 balance at 12.15% APR). My other is a Discover Card, which has only a $3500 credit line (and a $3,300 balance at 0% APR for 12 months, which then goes to 23.24%). I have a Capital One business card (this is the one I'm currently using for expenses and paying off every month), which has anywhere from $1000 to $1300 balance that is paid in full each month. The credit line is only $2800 (it's tied to my business) and has a 23.15% APR.

I also have a CareCredit, which is a dental line of credit with a zero balance and I want to say it's less than a $1000 credit line which I haven't used in forever, but it's still an open account.

So I think I understand what my best strategy is at this point. To pay off the $2800 I'm paying interest on even though I realize it hurts me that the Discover card is almost at 100% utilization, which hurts my score. But I have a thing about paying interest on stuff I'm not even using anymore -lol. So that's #1 priority. Then I'm going to pay down the Discover even though it's a 0% interest to at least a $30 balance or so. Finally, I'll stop using Capital One altogether and start using my citibank for purchases, since even at $1000/mo utilization will never be much more than 10% on that card. Think that's my best strategy?

Your best plan would be first to pay down your cards, wait for the new paid-off CC balances to appear on your credit reports, and then take out a $500 SS loan with Alliant, using the technique as described in the guidance.

I'll definitely research those techniques! I really appreciate the advice and sorry about hijacking this thread. You guys are great!

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Thu, 08 Dec 2016 06:56:27 GMT

@Anonymous wrote:
iwan2,

Off topic here, but what is your goal score in your sig lower than your current score?

It's been a while since I've been on here. That was my goal about a year ago. I updated my current score, but forgot to set a new goal. TBH, I'm not even sure what it should be or what's realistic. When I pay off my credit cards I'm hoping to pick up a few points, but there's only so much you can do, right? I'll take CreditGuyInDixie's advice and look into that $500 SS aliant installment loan. First I need to read the link. These forums are really the best when it comes to getting the best advice. Real happy to have found it. Hopefully, one day I can give back and contribute with knowledgeable advice.

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Thu, 08 Dec 2016 07:06:50 GMT

Your plans sound great. Really great! A few more thoughts....

You write:

I have a Capital One business card (this is the one I'm currently using for expenses and paying off every month), which has anywhere from $1000 to $1300 balance that is paid in full each month. The credit line is only $2800 (it's tied to my business) and has a 23.15% APR.

Capital One is an unusual issuer in that its business credit cards are reported to a consumer's personal credit file, just as though they were normal personal credit cards. Most other major issuers do not do this with their business cards (Amex, Bank of America, Chase, Citibank, etc.).

Nothing for you to do one way or the other here. Just letting you know that you are right to count your Cap 1 business card as part of your personal credit file (including utilization, etc.) but way down the road if you ever get another business card you may not need to do that.

You also write:

Finally, I'll stop using Capital One altogether and start using my citibank for purchases, since even at $1000/mo utilization will never be much more than 10% on that card.

I would definitely not stop using any of your cards altogether. It's fine not to use them for a long time, but I would still use them once every six months, just so the issuer knows you are still alive. Otherwise the card might get cancelled by the issuer. Once every 11 months is probably plenty safe, but why not make it easy to remember and do it roughly once every six months?

Also bear in mind that you get to consider your total credit limit when calculating utilization. Yours is $17,800 (maybe a tiny bit more if the CareCredit account is counted). So even if your reported balances go up to $1500 you will still be well under 9%. Per-card utilization does matter, but only when it gets very high. Your per card util will always be well under 29%.

Best of luck, bud.

Re: Personal Loan: How to maximize positive impact on score

SouthJamaica — Fri, 09 Dec 2016 04:30:38 GMT

@Anonymous wrote:
@Anonymous wrote:
Great to hear, iwan2! My comments in green below.

@Anonymous wrote:

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

Thanks again for the link. I will definitely read that whole thread. Just a brief skimming looks like there's a wealth of information in it!

Just bear in mind that paying in full does not necessarily involve having a low utilization, which you should also be looking for.

I realize this, which is why after I pay everything off I'm going to switch to the credit card with the highest credit limit for my cost of living expenses. Currently, that's not what I'm doing, but only because I'm attempting to pay as little interest as possible. Once everything is paid down then I'll switch which card I use.

If you tell BBS or SouthJ what your credit limits are on all three cards (total credit limit) and your typical monthly CC spend, then they can let you know whether you are set or whether you need to take extra steps to keep your total util low.

Not sure if either are still paying attention to my comments (I didn't mean to hijack this thread). But one is a Citibank Mastercard, which has a $11,500 credit line (which currently has a $2800 balance at 12.15% APR). My other is a Discover Card, which has only a $3500 credit line (and a $3,300 balance at 0% APR for 12 months, which then goes to 23.24%). I have a Capital One business card (this is the one I'm currently using for expenses and paying off every month), which has anywhere from $1000 to $1300 balance that is paid in full each month. The credit line is only $2800 (it's tied to my business) and has a 23.15% APR.

I also have a CareCredit, which is a dental line of credit with a zero balance and I want to say it's less than a $1000 credit line which I haven't used in forever, but it's still an open account.

So I think I understand what my best strategy is at this point. To pay off the $2800 I'm paying interest on even though I realize it hurts me that the Discover card is almost at 100% utilization, which hurts my score. But I have a thing about paying interest on stuff I'm not even using anymore -lol. So that's #1 priority. Then I'm going to pay down the Discover even though it's a 0% interest to at least a $30 balance or so. Finally, I'll stop using Capital One altogether and start using my citibank for purchases, since even at $1000/mo utilization will never be much more than 10% on that card. Think that's my best strategy?

Your best plan would be first to pay down your cards, wait for the new paid-off CC balances to appear on your credit reports, and then take out a $500 SS loan with Alliant, using the technique as described in the guidance.

I'll definitely research those techniques! I really appreciate the advice and sorry about hijacking this thread. You guys are great!

If the Capital One Spark card is your only business card, and you have a business, then you should keep on using it. It's a great card anyway, unless you don't like a business card that reports on your personal credit.

Bear in mind that utilization is almost always based on the statement balance, so if you pay it off before the statement cut, it won't be an issue.

You should get that Discover card below $3150, I don't care whether you're paying zero interest or not. A maxed card is murder.

Re: Personal Loan: How to maximize positive impact on score

heavyjay — Fri, 09 Dec 2016 00:43:40 GMT

This has been a most informative topic. I just took out a loan with Sofi and this thread has taught me a lot. While I'm not in a position to immediately pay it down to 9%, I'll be able to pay 33% of it back immediately. Many thanks to all who have contributed so far.

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Fri, 09 Dec 2016 07:41:26 GMT

@SouthJamaica wrote:
@Anonymous wrote:
@Anonymous wrote:
Great to hear, iwan2! My comments in green below.

@Anonymous wrote:

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

Thanks again for the link. I will definitely read that whole thread. Just a brief skimming looks like there's a wealth of information in it!

Just bear in mind that paying in full does not necessarily involve having a low utilization, which you should also be looking for.

I realize this, which is why after I pay everything off I'm going to switch to the credit card with the highest credit limit for my cost of living expenses. Currently, that's not what I'm doing, but only because I'm attempting to pay as little interest as possible. Once everything is paid down then I'll switch which card I use.

If you tell BBS or SouthJ what your credit limits are on all three cards (total credit limit) and your typical monthly CC spend, then they can let you know whether you are set or whether you need to take extra steps to keep your total util low.

Not sure if either are still paying attention to my comments (I didn't mean to hijack this thread). But one is a Citibank Mastercard, which has a $11,500 credit line (which currently has a $2800 balance at 12.15% APR). My other is a Discover Card, which has only a $3500 credit line (and a $3,300 balance at 0% APR for 12 months, which then goes to 23.24%). I have a Capital One business card (this is the one I'm currently using for expenses and paying off every month), which has anywhere from $1000 to $1300 balance that is paid in full each month. The credit line is only $2800 (it's tied to my business) and has a 23.15% APR.

I also have a CareCredit, which is a dental line of credit with a zero balance and I want to say it's less than a $1000 credit line which I haven't used in forever, but it's still an open account.

So I think I understand what my best strategy is at this point. To pay off the $2800 I'm paying interest on even though I realize it hurts me that the Discover card is almost at 100% utilization, which hurts my score. But I have a thing about paying interest on stuff I'm not even using anymore -lol. So that's #1 priority. Then I'm going to pay down the Discover even though it's a 0% interest to at least a $30 balance or so. Finally, I'll stop using Capital One altogether and start using my citibank for purchases, since even at $1000/mo utilization will never be much more than 10% on that card. Think that's my best strategy?

Your best plan would be first to pay down your cards, wait for the new paid-off CC balances to appear on your credit reports, and then take out a $500 SS loan with Alliant, using the technique as described in the guidance.

I'll definitely research those techniques! I really appreciate the advice and sorry about hijacking this thread. You guys are great!

If the Capital One Spark card is your only business card, and you have a business, then you should keep on using it. It's a great card anyway, unless you don't like a business card that reports on your personal credit.

Bear in mind that utilization is almost always based on the statement balance, so if you pay it off before the statement cut, it won't be an issue.

You should get that Discover card below $3150, I don't care whether you're paying zero interest or not. A maxed card is murder.

So you're suggesting paying off the balance before the statement is cut? This might require several payments, but it makes sense. That way, there would be less of a balance reporting. I could even pay off as I use it or once a week or so. Excellent idea!

As for the Discover, I know. I know. But how murderous can it be? It's just for a few months. So my score is 732 instead of 738 or so? What I really need is for that one medical baddie to fall off. I wonder if I could write a letter of consideration? Or that's probably not the right terminology. What is a letter where you ask they remove a negative remark called again? A good faith letter?

Anyway, thanks again! I'll definitely start paying down the Cap card before the statement is cut from now on.

Re: Personal Loan: How to maximize positive impact on score

Anonymous — Fri, 09 Dec 2016 14:02:45 GMT

You are referring to a "goodwill letter." I agree that getting a baddie removed is probably the best thing you can do for your score, so I'm very big on writing GW letters. Sometimes it may take writing a bunch to yield a favorable result, but IMO it's well worth it in the end.

Here's a thread I recommend to anyone that is considering starting a GW letter campaign:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/The-Saturation-Technique-Best-GW-adjustment-odds/td-p/4727098