$100K SSL - potential negatives? - myFICO® Forums

HappyBuilder42 · ‎11-10-2020

I was about to go on an app spree this summer, but then my wife wanted to move so applying for new credit wasn't in the cards.

So, with selling our house and buying a new house, I will be losing my oldest(15 years) installment account that was 40% paid down and replacing it with a new one that is 0% paid down. I also have a 60 month car note that's about a year old.

I am sure the above factors will affect my credit scores negatively. Luckily, we have equity in our house so we'll have some left over cash after making a down payment on the new house.

My idea is to use that cash to do the NFCU SSL technique to lessen my total installment utilization. From what I read, an SSL loan for over $30K can be borrowed for up to 180 months. I would borrow about $100K and pay it down to $2K. I would also pay down the car note down to $2K.

Here is an example after paying down the SSL and car note -
New home loan: $300K - balance $300K
SSL: $100K - balance $2K
Car loan: $25K - balance $2K

This would put my total installment utilization at 72% . While not great, it's better than 100%.

I am hoping this plan helps with the potential hit to my credit score. The only negative I can think of is that my mortgage payment would be paying down my total installment loan amount at a slower clip. Before I go forward with plan I just want to make sure I am not missing something. Any problems with this plan?

We are stardust, we are golden
We are billion-year-old carbon
And we've got to get ourselves
Back to the garden

Anonymous · ‎11-10-2020

DTI for future apps would be the biggest issue, otherwise it's a sound idea if it doesn't heavily impact your DTI

Affects on average age of accounts may apply to your scores, but probably negligible

AverageJoesCredit · ‎11-11-2020

No expert on scoring but with a mortgage or a car, i dont think one needs a ssl? It doesnt make sense to me as you already have loans reporting. Keep the money you have fir a ssl and use it for other things. In my way average opinion

rostrow416 · ‎11-11-2020

Is there any need to completely maximize your score? If your profile is solid overall it shouldn't take much of a hit, and it sounds like a lot of hoops to jump through to maybe get a point or two.

Your AAoA will drop since you are adding a second brand new account and you will most likely take an additional inquiry, so I don't see the gain being quite what you expect it to be.

Anonymous · ‎11-11-2020

@rostrow416 wrote:
Is there any need to completely maximize your score? If your profile is solid overall it shouldn't take much of a hit, and it sounds like a lot of hoops to jump through to maybe get a point or two.
Your AAoA will drop since you are adding a second brand new account and you will most likely take an additional inquiry, so I don't see the gain being quite what you expect it to be.

^^ this is how I feel

I added a mortgage at in July still nearly at 100% util and just financed a used car that reported for thie first time this week and my scores only fell a few points. My profile tends to be sensitive w/a reporting BK as well.

I think this is putting a lot more stock in installment util than it's actually worth.

Anonymous · ‎11-11-2020

Paying down the car note will definitely help, but i dont see how adding that large of a SSL will. The payment on a $100K loan will still be fairly high compared to say $5K which would raise DTI. It doesn't really matter the amount of the loan as long as it's reporting under 9% UT, that's what contributes the boost. I'd think putting that $100K towards the Mortgage would be more beneficial. You're not wanting for installment loans in terms of needing the mix portion ov score, so paying down on the existing loans would do more good than opening a third. IMO

SouthJamaica · ‎11-11-2020

@HappyBuilder42 wrote:
I was about to go on an app spree this summer, but then my wife wanted to move so applying for new credit wasn't in the cards.

So, with selling our house and buying a new house, I will be losing my oldest(15 years) installment account that was 40% paid down and replacing it with a new one that is 0% paid down. I also have a 60 month car note that's about a year old.

I am sure the above factors will affect my credit scores negatively. Luckily, we have equity in our house so we'll have some left over cash after making a down payment on the new house.

My idea is to use that cash to do the NFCU SSL technique to lessen my total installment utilization. From what I read, an SSL loan for over $30K can be borrowed for up to 180 months. I would borrow about $100K and pay it down to $2K. I would also pay down the car note down to $2K.

Here is an example after paying down the SSL and car note -
New home loan: $300K - balance $300K
SSL: $100K - balance $2K
Car loan: $25K - balance $2K

This would put my total installment utilization at 72% . While not great, it's better than 100%.

I am hoping this plan helps with the potential hit to my credit score. The only negative I can think of is that my mortgage payment would be paying down my total installment loan amount at a slower clip. Before I go forward with plan I just want to make sure I am not missing something. Any problems with this plan?

IMHO it won't help your score at all to go through those gymnastics.

BTW you could accomplish exactly the same thing by applying the 98k to your new mortgage. That might or might not help your scores; I have zero experience in that realm.