Credit Builder Loan - Harmful?

[Anonymous]

I learned about credit builder loans on my first thread and have a few questions about them: http://ficoforums.myfico.com/t5/Credit-Cards/Thanks-myFICO-And-future-plans/m-p/4012631

Would it be possible that a credit builder loan of $1000 could do more harm than good when applying for credit cards/loans in the future?  Is it possible that a lender could think that I'm financially unstable if I had to take out a loan for $1000?  Should I take out a larger loan?  

Also, has anyone here done a credit builder loan or a similar type of secured installment loan?  By how many points did your fico score jump?  I have no loans on my credit report -- just the credit cards mentioned in the linked thread.

[Imperfectfuture]

It won't harm. I have no desire to purchase car nor house. So I have secured installment loan with credit union. 500 @ 3.2% interest! four years, 11.12 monthly payment so as to not affect DTI.

After 3 months, regardless of amount of new credit added, it has provided a utilization buffer, and my scores don't dip below 720. Alliant has even better rate small loan like this. It's cheaper than credit score monitoring, and adds points.

For fico scoring purposes, a secured installment does not score differently than an unsecured, and a 500 doesn't score differently than a 10k. Secured looks even better (could be darn cheap car). I have had no adverse reactions in my credit card quest, and underwriters have not brought it up.

It also raised my mortgage and auto scores. Something to consider if planning those purchases in the future.

[Anonymous]

I took out a $2050 secured installment loan in February of last year. Not really sure how much it helped since I've had a lot of new credit action since then. However, when I reconned the Chase Freedom a few days ago, the analyst specifically asked about it.

[Anonymous]

How did you respond when the analyst asked about it?  Did you get approved for the card?

[Anonymous]

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@Anonymous wrote:

How did you respond when the analyst asked about it?  Did you get approved for the card?

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Just told her the truth, that I was trying to improve my profile. Yes, I got approved.

[Revelate]

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@Anonymous wrote:

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@Anonymous wrote:

How did you respond when the analyst asked about it?  Did you get approved for the card?

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Just told her the truth, that I was trying to improve my profile. Yes, I got approved.

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This has been my standard answer whenever asked about any of my secured loans (I have had 3, 2 open currently)... but the question rarely comes up to be honest.  People know what's up as that trick has been around since the early 90's if not earlier.

To date I have not had a denial of any application other than a flier CLI request with BOFA (/yawn).