Great idea. My comments in blue below.
@Anonymous wrote:
Hello, I was wondering what you all would suggest in terms of personal loans that can help boost my credit score, but not cost me too much in interest or fees.
I understand that there are credit services like SelfLender that allow you to make monthly payments for a year before you are able to withdraw money they have held for you until you are done with payments. I just wish they offered larger and longer loan options, since I already PIF $2000 12-month loan from TD Bank.
Longer is the thing you want. The size of the loan won't matter as far as FICO scoring. Longer is better since it enables you to get the scoring benefit for a long time. Most of the scoring benefit will disappear when the loan is paid off -- thus the advantage of a long term.
I would also greatly prefer a service that lets me pay down all but a small amount right at the beginning of my loan, so I don't run the risk of not having enough money when the payment date comes. Side note, I know I should never completely pay off a loan before the end of its term, but will paying down most of it also not be good either?
Paying most of it down at month 1 is VERY good in terms of credit scoring. FICO 8 likes seeing it when you have open loans that are mostly but not entirely paid off.
It also helps you financially because you end up paying very little interest.
The trick is in finding lenders that will enable you to pay off most of it (pay it down to 8.9% of the original amount) at month 1, but then still allow you to keep the loan open for the full term. Such lenders just push back the due date of the next payment several years into the future.
We have two confirmed lenders that do this (Navy Fed and Alliant). We are looking for others.
I hope to start a business someday (not anytime in the next 4-5 years) and I think something like this would help me secure more favorable rates for a business loan. Thanks for reading.
