Small Loan from Credit Union...How should I go about this??

[Anonymous]

My scores are upper 500's/low 600's. My credit union was iffy about giving me a loan, after about a day later, they contacted me and approved me for $1,500. I can pay this off at the end of next month, but do you think I should pay this monthly until the beginning of next year to show good payment history. Plus, I don't have any installment loans at the time. At the moment, I just:

Cap One-$300 (not reporting yet)

Fingerhut-$100

Best Buy MC-$100

I have two baddies (Midland) working on paying those off

Bankruptcy (discharged 2002)

[fused]

Moving to general credit topics forum.

[Tazman81]

It depends.  What type of loan is it?  A secured loan, or just a standard personal loan?  If you are looking to build a good relationship with the credit union, then I would pay it off over the next 6-8 months.  If you are going to have the money at the end of this month that you could use to pay this off, I would put that money aside into a savings account or CD with that institution so just in case you get into a bind, you can use that money to pay off the loan to make sure you will not do any more damage to your credit.

Do you know what your current scores are?  Also, try not to carry big balances on your revolving credit accounts.  The magic number seems to be between 1% and 9% of your total revolving credit limit.  If your scores are not so good, then making purchases and paying on your credit cards will likely help your scores more than the installment loan, but the installment loan will look good to your credit union and make them more likely to want to loan to you again in the future.

So, if you are thinking of getting another loan with the credit union in the future, then I would pay off this loan over a 6-8 month period.  That way they will see you are responsible with payments of their loans.

[Anonymous]

Is it secured or unsecured?

[Creditaddict]

if you are working on paying collections, I would use the new loan to clear those up and then pay the loan off over 6 months to build history with them and a good payment history on credit.

[Anonymous]

It's a secured loan due to my low scores TU(620) and Equifax (590). Wasn't a big deal because my car is old (97 Lexus ES300), and I know that I'll be able to pay the loan off without risking loosing my car. My main reason for the loan was to show the installment on my credit and also b/c I would like to take out an auto loan with my credit union beginning of next year. I keep my balances low on my credit cards, most time PIF at the end of the month. I'll just keep the money in a savings account with the credit union.

[Anonymous]

Yup sumthing that looks good on paper and yup something that adds to your credit mix.  Your right all you end up paying for in the end is the interest which is low since it's backed up by  frozen liquid assets.  Nothing insures a borrowed dollar better than another dollar.

[RobertEG]

Retain it in your actuve credit mix.

Dont rush to pay it,  You obtined it for a reason.  Millk it.  Just pay at least the min each month.

I say not  to PIF, just pay  min monthly.

[Anonymous]

---

@RobertEG wrote:

Retain it in your actuve credit mix.

Dont rush to pay it,  You obtined it for a reason.  Millk it.  Just pay at least the min each month.

I say not  to PIF, just pay  min monthly.

---

Concur ... that is the whole point of doing this thing.  Paying it off before it's term almost defeats the purpose the miniscule amount of interest paid on that amount could be wasted on such things like a dollar store. Point is it's not like purchasing a car to improve your credit mix or anything.

[Anonymous]

Perfect! They gave me  a year to pay it off. I doubled what to take out, so I'll be done making payments on the loan in 6 months (will be applying for an auto loan with them, so I want the loan to be paid off by that time). So I'm thinking it'll be a win win situation. Paying the loan off 6 months early, getting an installment on my credit report, and the CU having a good history with me. I'm learning so much from this board. Thanks so much for the wonderful advice/information!