Secured loan to improve credit?

Anonymous · ‎02-15-2008

I contacted my credit union today about taking out a small personal loan to help rebuild my credit. They stated that I don't currently qualify for an unsecured loan, but I do qualify for a secured loan. The rate is 1.5% above their auto rate of 4.5%. Basically I would deposit funds into my share account and a loan matching that amount would be given.

Is it worth it to take out a loan of say $500? Do I just turn the money around and pay off the balance or do I wait it out for say a year? Would I get a better return on my money (in terms of FICO points) by applying instead for the secured visa that they offer?

Any advice or similar stories would be appreciated.

Anonymous · ‎02-15-2008

When reporting it will not show as secured. You also need it to report for at least 6 months to do any good. The longer the better.

What CC do you have?

Anonymous · ‎02-15-2008

I have a secured loan through Chase. It does report as secured. Not sure if CU's report differently.

My banker said to let it report at the very least 6 months, preferrably a year. It is set up for a 2 yr repayment plan.

I got mine because broker said to add to credit mix, since I do not have a mortgage, car or any other installment loan listed that are currently open.

Anonymous · ‎02-15-2008

Sorry but I do not have a secured loan & have seen others say that it didn't show on their CR.

Anonymous · ‎02-15-2008

I like secured loans. First they have lower APRs. They all showed secured or something similar on my CRs. It doesn't matter secured or not. You are mostly getting points for month reviewed. I'd keep the loan for 12 months. Paying it too early will close the account before you can gain points for history. I took out another loan after I learned my mistake by closing the first one early. Now I'm holding my new loan for a year. I didn't get any history points on my first one. Yes if you do not have other loans it helps.

oceanlover · ‎02-15-2008

I have some unsecured and some secured loans and some of them report secured, some report unsecured and some make no notation at all. So, I think it depends on how the creditor reports.

Anonymous · ‎02-15-2008

I don't think it really counts against us that it is secured. So long as timely payments are made and some history is gained, all should be fine.

I wasn't trying to be defensive, just reporting that my chase loan is reported as secured. I have a secured cc with BoA and it too states it is secured. (All 3 CRA's) They are helping me to up my scores and get better cards, so, obviously they must be helping.

Anonymous · ‎02-15-2008

They mess up on titles sometimes. I have also had secured loans marked differently. No difference in scores, however I would not want your secured loan to look like a collection as in my case. lol. I got pos points, but under a manual review it looked scary. I had them change the title. Collection repayment just didn't look right. The point was, your score gains should be the same for secured and unsecured.

Anonymous · ‎02-15-2008

stef37 wrote:
I don't think it really counts against us that it is secured. So long as timely payments are made and some history is gained, all should be fine.

I wasn't trying to be defensive, just reporting that my chase loan is reported as secured. I have a secured cc with BoA and it too states it is secured. (All 3 CRA's) They are helping me to up my scores and get better cards, so, obviously they must be helping.

You didn't say anything wrong stef. The idea of this thread is for everyone to state their opinions!!

I do have an auto loan that I haven't had for 12 months & I am going to refi. I think my first payment was in May or June 2007. But my payments go down $50 bucks which I can use to pay down the new loan.

Anonymous · ‎02-16-2008

Thank you for all your insight.