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Do I really need a loan to get a great CS?

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Do I really need a loan to get a great CS?

I currently have a handful of credit cards that were acquired between 2015-2017. I'm currently gardening to improve my AAOC.

 

Do I really need a loan in order to obtain a great credit score? I don't need a loan so it doesn't make sense to me to pay interest unnecessarily. I would be happy with scores 725-750. Is it possible to reach that by just letting my accounts age? 

 

05/2017 Scores: EQ691 TU670 EX669
Message 1 of 10
9 REPLIES 9
Community Leader
Super Contributor

Re: Do I really need a loan to get a great CS?

If a handful of CCs means 3-5 and they are majority bank cards, I think you're on the right track. You don't necessarily need a loan to obtain a great credit score, but having an installment loan (car, mortgage, or secured installment loan) can bump your scores up ~15-25pts. You didn't provide any DPs so it's difficult to say if you can increase your scores to 725-750 by letting your accounts age. I have some questions that may give us a better idea how to respond to your questions:

1. What's your FICO scores & AAOAs at the present time?


2. Any baddies, derogs, collections, BK, tax lien? (Any of these can cast a spell on scores increasing quickly).


3. How many inqs?

Other ways to increase your scores:

1. Let only 1 CC report a balance of <9%
2. PIF all other CCs monthly
3. Never, ever make a late payment (30-day late)

And you're absolutely right -- don't borrow money you don't need!

I hope this helps.

REVISED GOAL: Garden ‘til Dec 2020 — 0 inquiries

Previous Goal: Garden til APR 2020 (extended) and
800 Club (accomplished)


DEC 2019: EX 816, TU 820, EQ 810
DEC 2018: EX 777, TU 783, EQ 799
DEC 2017: EX 775, TU 778, EQ 769

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Message 2 of 10
Super Contributor

Re: Do I really need a loan to get a great CS?


@empiregoals wrote:

I currently have a handful of credit cards that were acquired between 2015-2017. I'm currently gardening to improve my AAOC.

 

Do I really need a loan in order to obtain a great credit score? I don't need a loan so it doesn't make sense to me to pay interest unnecessarily. I would be happy with scores 725-750. Is it possible to reach that by just letting my accounts age? 

 


 

It's possible to spend almost no money on interest and still get the scoring benefit of the loan.  Read the first 2-3 posts on this thread:

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

 

The technique will add roughly 30 points to your score and will cost you a total of about $8-9 over the total life of the loan (five years).

Message 3 of 10
Established Member

Re: Do I really need a loan to get a great CS?

1. What's your FICO scores & AAOAs at the present time?

2. Any baddies, derogs, collections, BK, tax lien? (Any of these can cast a spell on scores increasing quickly).

3. How many inqs?

 

Thanks for your reply! I currently have 6 credit cards, Home Depot, and the others are major banks.  

 

My current scores are 665, 665, & 684

 

2 collections, 1 will be removed in Oct. the other should be falling off in 2018. 2 paid tax liens, I'm not sure when the tax liens will fall off. Is it 7-10yrs after being reported or after paying?

 

5 inqs

05/2017 Scores: EQ691 TU670 EX669
Message 4 of 10
Established Member

Re: Do I really need a loan to get a great CS?


@CreditGuyInDixie wrote:

It's possible to spend almost no money on interest and still get the scoring benefit of the loan.  Read the first 2-3 posts on this thread:

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

 

The technique will add roughly 30 points to your score and will cost you a total of about $8-9 over the total life of the loan (five years).


 

 

Thank you, Interesting thread! I may be understanding this wrong, but does having this type of loan artificially inflate your score? Will my score drop down after I pay off the loan?

05/2017 Scores: EQ691 TU670 EX669
Message 5 of 10
Super Contributor

Re: Do I really need a loan to get a great CS?


@empiregoals wrote:

I currently have a handful of credit cards that were acquired between 2015-2017. I'm currently gardening to improve my AAOC.

 

Do I really need a loan in order to obtain a great credit score? I don't need a loan so it doesn't make sense to me to pay interest unnecessarily. I would be happy with scores 725-750. Is it possible to reach that by just letting my accounts age? 

 


Yes it is


Total revolving limits 639500 (558000 reporting)
Message 6 of 10
Super Contributor

Re: Do I really need a loan to get a great CS?


@empiregoals wrote:

@CreditGuyInDixie wrote:

It's possible to spend almost no money on interest and still get the scoring benefit of the loan.  Read the first 2-3 posts on this thread:

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

 

The technique will add roughly 30 points to your score and will cost you a total of about $8-9 over the total life of the loan (five years).


 

 

Thank you, Interesting thread! I may be understanding this wrong, but does having this type of loan artificially inflate your score? Will my score drop down after I pay off the loan?


Yes it does. In my case it added around 25 points.

 

If you were to pay the loan down to zero, at a time when you have no other loans, then yes you would lose the points, which is why most of us go for the 60-month term.


Total revolving limits 639500 (558000 reporting)
Message 7 of 10
Super Contributor

Re: Do I really need a loan to get a great CS?

As SouthJ says, most people who use the SSL technique opt for a 60-month loan.  By the time it gets to month 58, they often have a car loan or maybe even a home loan, and thus the technique is no longer helpful (or needed).  But some people still have no other installment loan at month 58.  Which is fine.  You can just restart the process by adding a new 60 month loan at that point.

 

The 30 point gain is just an estimate.  Some people experience a bit less.  Others get closer to 40.

Message 8 of 10
Regular Contributor

Re: Do I really need a loan to get a great CS?


@empiregoals wrote:

I currently have a handful of credit cards that were acquired between 2015-2017. I'm currently gardening to improve my AAOC.

 

Do I really need a loan in order to obtain a great credit score? I don't need a loan so it doesn't make sense to me to pay interest unnecessarily. I would be happy with scores 725-750. Is it possible to reach that by just letting my accounts age? 

 


I think, from my experience, it is doable...  But I heard SSL technique really helps......

 

I started exactly a year ago and currently have 4 cards.   My current fico 8 is 720-740 a year later.  No baddies thou.

 

Applied for a few additional cards a few weeks ago - really wanted SL over 10k - and waiting to see how it will affect the score......

Message 9 of 10
Established Member

Re: Do I really need a loan to get a great CS?


@jeffreymrimd wrote:

I think, from my experience, it is doable...  But I heard SSL technique really helps......

 

I started exactly a year ago and currently have 4 cards.   My current fico 8 is 720-740 a year later.  No baddies thou.

 

Applied for a few additional cards a few weeks ago - really wanted SL over 10k - and waiting to see how it will affect the score......


 

That's good to know. I suppose I could always apply again after the loan period ends if I still need the boost. Thanks for your feedback!

05/2017 Scores: EQ691 TU670 EX669
Message 10 of 10
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