topic Re: USAA secured CD loan, any information from members here? in Rebuilding Your Credit

USAA secured CD loan, any information from members here?

Student_Loans_Kill — Mon, 27 Feb 2012 13:09:56 GMT

I searched all over, I need to have a loan on my credit profile to build. I read the CC and loan don't report as secured, and they don't hard pull report. Does anyone ave experience with the actual loan? I have the AmEx but only $500 (was turned down for Wellsfargo the same time I applied for this card last June) My thoughts are to deposit $3000 into a CD, request the loan. Deposit the loan money back into a second CD for a second secured USAA credit card with a higher $3000 limit. I currently have two Capital one cards, with $500 limits unsecured. I was approved for a $30k Capital One auto loan at 12% for 72 months but since I'm shooting for a mortgage in a year, I won't be adding that type of debt

Re: USAA secured CD loan, any information from members here?

llecs — Mon, 27 Feb 2012 14:43:50 GMT

Why would you want a secured loan, especially with a mortgage app in the near future?

Re: USAA secured CD loan, any information from members here?

Student_Loans_Kill — Mon, 27 Feb 2012 15:48:56 GMT

Because other than two small capital one cards I have no credit or credit profile. USAA doesn't pull a credit report, only reports to all 3 that payments are made

Re: USAA secured CD loan, any information from members here?

llecs — Mon, 27 Feb 2012 17:27:30 GMT

Did you follow through with the car loan? I was unclear about that.

There's no doubt that a mix of credit is important. We can only guess what that mix might be, but I've seen poster hit upper 700s with only 2 CCs and I've seen plenty of posters mention they hit into the 800s with 3 or more CCs reporting, and no loans whatsoever (e.g. no SLs, no car, no mortgage, etc.).

Typing on the assumption you accepted the car loan....

If adding a loan, I am assuming you want to do so to improve that mix. In terms of FICO scoring, any loan like a mortgage, car, etc., fulfills your installment mix. I don't think you'd see any benefit or gain by adding a loan because you already have a car loan. Your mix is there already. In fact, I bet $$$ that your FICO will drop if you add an installment loan. Even if there's no inquiry, if it reports, you'll get hit with that new credit ding and lose even more if your AAoA was impacted. Not only would FICO see a negative hit, but your DTI will be impacted as well, which may or may not be an issue come mortgage time. In essence, you end up spending $$$ on interest when you don't have to. I bet any FICO impact would likely go away by the 12-month mark.

Typing on the assumption you don't have a new car....

Installment in terms of mix is a tiny part of FICO scoring as indicated above. You can get your scores close to or past 800 with what you have (minus baddies, lots of age, etc.). I bet you won't see a net gain if you add an installment assuming you have no loans, opened or closed, reporting now. I think you'd see a loss. I could be wrong and if I am and you are pulling your FICO scores from here, definitely post back. I think you'd get a bigger bang for your buck by adding another CC. You are lacking there. But I wouldn't add it if applying inside of 12 months for a mortgage.

The CLs on your two CapOne CCs don't matter. It doesn't matter per FICO if you have low CLs or high CLs. It's how you use them that counts. Come mortgage time, get one to report $0 and the other a couple of bucks for max pointage.

Re: USAA secured CD loan, any information from members here?

Student_Loans_Kill — Mon, 27 Feb 2012 20:16:16 GMT

no I decided against the car as a method top rebuild credit. I paid cash for my car and I think if I put $700 a month in the bank for a year, I come out ahead on the car pays for itself. Also, I have no loan history other than student loans which is not good, at all, 28 defaults, all William D Ford consolidated. Someone said for a mortgage I need to demonstrate a loan history Installment, which I thought I could do with USAA secured. Not sure why it goes down, because there is no credit pull, only positive reporting.