@Kizzel00 wrote:
So I'm joining a credit union that offers a credit builder loan. Pretty much paying into a savings account and pay them interest. I'm thinking of doing it for a total of 2500 in 12 months. Since I'm having a baby in January, I'm thinking of paying it off in 6 months instead of 12 so I have access to the money for the baby. Do you think this would still be beneficial to do while rebuilding my credit, even if I pay it off in half the time?
I think the best thing for your credit would be to pay down the loan to under 9% and then stretch out the small payments until the end of the term. That is what I am doing with my secured loan.
You take out your loan for $2500. You don't set up auto payments. They take $2500 from one account and then loan you that amount. You pay off 91% of the loan or $2275. That money goes back to your savings account and you have full access to it. You own them $225. You now make small payments each month.
You benefit by having an installment loan in your credit mix. You also benefit by having paid down most of that loan. When I did this I got a statement on my CCT account that said "Substantial installment loan repayment" and I got more than a 20 point boost.
I would talk to someone at the CU and ask them about their loan program and see if they have any objections to this plan. If they do then you could try Alliant CU. They do this type of loan for even smaller amounts and for longer terms.
Good luck with your baby.
