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If LO asks what the SSL is for?

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Regular Contributor

If LO asks what the SSL is for?

When my car loan is about paid off I'm going to do the SSL and promptly pay it off to 8% and this balance will carry over when I apply for a mortage so I have that open installment account to maximize my scores because my car loan would be closed by then. But I'm sure the LO will ask what this SSL is for. What's the best response for this? Do you just straight up say it was to maximize my scores for a home loan or would that come across as kinda risky to them because you're trying to pad your numbers last minute. Or maybe it won't come across that way?

Message 1 of 9
8 REPLIES 8
Super Contributor

Re: If LO asks what the SSL is for?

Can you remind us when you think you'll most likely be applying for a home loan?

Message 2 of 9
Community Leader
Senior Contributor

Re: If LO asks what the SSL is for?

I'd tell him exactly why you did it. You don't have any other installment loans, and you wanted to restore the points that you'd lose for not having one. If I were a loan officer, I'd be impressed that you took the initiative to do that.

Message 3 of 9
Regular Contributor

Re: If LO asks what the SSL is for?

If my scores are where I want them at then most likely June or July of next year.

Message 4 of 9
Regular Contributor

Re: If LO asks what the SSL is for?

That's a good way of explaining it if they ask.

Thanks for the response!

Message 5 of 9
Super Contributor

Re: If LO asks what the SSL is for?


@joesef wrote:

When my car loan is about paid off I'm going to do the SSL and promptly pay it off to 8% and this balance will carry over when I apply for a mortage so I have that open installment account to maximize my scores because my car loan would be closed by then. But I'm sure the LO will ask what this SSL is for. What's the best response for this? Do you just straight up say it was to maximize my scores for a home loan or would that come across as kinda risky to them because you're trying to pad your numbers last minute. Or maybe it won't come across that way?


I wouldn't be sure.  Quite possibly the LOL will never ask.  Recently opened accounts (last 6 months say) are sometimes asked about.  A small loan that is mostly paid off and was taken out almost a year ago?  Possible I suppose, but not obvious to me that the LO will care.

 

As Heaven says, just be honest and keep it simple.  If you tell him it was a credit builder loan, the LO will totally know what you mean.  It's a common thing to do.  It's just that the folks here have found ways to improve it.

 

The one thing you should bear in mind is the the mortgage models are very old and do not necessarily benefit from the SSL technique.  FICO 8 does, but the mortgage models are not FICO 8.

Message 6 of 9
Regular Contributor

Re: If LO asks what the SSL is for?

I've always heard that the lenders wanna know about everything so I figured that question may come up and wanted a good answer for it. I just wanna be prepared for anything. Smiley Wink

 

As far as the mortage scores not being helped from the SSL technique, I didn't think of that but glad to have the knowledge now. Even if not, that's ok. I'll take a bump in any of my FICO scores if they come! I love this forum. I've learned so much so quickly. Thank you.

Message 7 of 9
Legendary Contributor

Re: If LO asks what the SSL is for?

The loan officer is likely looking at your total debt and your debt to income ratio.

As such, if you obtain a loan and use it pay off other credit balances, it does not increase your overall debt.

However, if you use the loan for other purposes, it will result in a net increase in your total debt.

Message 8 of 9
Community Leader
Senior Contributor

Re: If LO asks what the SSL is for?

In this case, you're adding $44 principal and $9 in eventual interest to your overall debt. It's not a DTI game changer.

Message 9 of 9
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