Credit mix question

[Madyun1982]

Hello everyone. I just paid off my loan thru PenFed and was wondering how will this affect my score? I only had the loan for the credit mix as I have no other loans. Should I take out another small loan to have credit mix?  I'm not sure how paying off the loan is going to affect my credit score moving forward..I only have one hard inquiry that falls off in August. Thanks in advance 

[coldfusion]

YMMV but don't be surprised if your FICO scores drop by somewhere around 20-30 points as you won't have an open installment loan reporting. 

Up to you as to whether or not you get a new share secured loan or not.  Emperically if you're left with FICO scores at least in the 760-780 range once the loan reports as closed and your scores are recalculated the positive impact from having an open installment loan with less than 9% utilization reporting is more about positive reinforcement of ones accomplishments than it is about improving odds of approval or better terms offered upon approval.  

[JoeRockhead]

Both open and closed loans count towards your mix as long as they stay on your reports.  If it was your only open loan, you'll get a score penalty for "no open installment loan".  

If you have no other open loan and you're wanting to boost your scores back up, I'm sure someone will come along and tell you to open a SSL, Share Secured Loan (lots of info in the forum on the subject) 

[Madyun1982]

Thanks for the reply

I have 0% currently as credit usage. I didn't know my Amazon Visa did mid reporting.. My scores are currently around 760.. So I'm waiting to see how it will affect my score. I'm not about to purchase a home or anything like that, so it really doesn't matter if it drops again. I've just gotten use to my score being at a certain place. 

[Madyun1982]

Thank you. Yes it was the only open loan I had.. And I was looking at the SSL loan, but don't quite understand it to be honest.. Lol 

[Varsity_Lu]

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@Madyun1982 wrote:

Thank you. Yes it was the only open loan I had.. And I was looking at the SSL loan, but don't quite understand it to be honest.. Lol 

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An SSL is a fake loan. You put $3,000 into a checking account, then immediately borrow $3,000 from the same bank for a 10 year term. You then withdraw the $3,000 you originally put in and use it to pay off $2,800 of the loan right away, leaving your loan balance at $200. That $200 gets paid off over the next 10 years. It's essentially just shuffling your own money around, but the bank structures it to look like a real loan that you are paying off over 10 years. You don't actually borrow money, but it looks like you do on your credit report. This product is only for those of us who don't have any real loans (car, mortgage, etc).

[Madyun1982]

Ooooh Thank you..I may go this route!

[FicoMike0]

Ditto @Varsity_Lu 

Except not the checking, the regular savings. There's a detailed thread on penfed ssl, search it. If you have questions post and well answer. It's a little complicated, but it works.

[FlaDude]

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@Madyun1982 wrote:

Thanks for the reply

I have 0% currently as credit usage. I didn't know my Amazon Visa did mid reporting.. 

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If it's a Chase card, they automatically mid-cycle report whenever the statement balance is paid off.

[FireMedic1]

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@Varsity_Lu wrote:

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@Madyun1982 wrote:

Thank you. Yes it was the only open loan I had.. And I was looking at the SSL loan, but don't quite understand it to be honest.. Lol 

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An SSL is a fake loan. You put $3,000 into a checking account, then immediately borrow $3,000 from the same bank for a 10 year term. You then withdraw the $3,000 you originally put in and use it to pay off $2,800 of the loan right away, leaving your loan balance at $200. That $200 gets paid off over the next 10 years. It's essentially just shuffling your own money around, but the bank structures it to look like a real loan that you are paying off over 10 years. You don't actually borrow money, but it looks like you do on your credit report. This product is only for those of us who don't have any real loans (car, mortgage, etc).

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@Madyun1982 You put whatever amount into a savings account. Not checking. Say $3000. Once posted. Take out $ 2800. It will place the next payment way out there. You'll want to leave 8.99% or less reporting. Theres you point gain returning. Your taking from your own savings account. I did it with NFCU. But paid say every 6 months $10 dollars to show usage.