Soft Inquiry Rebuilder Loans

Broke_Triathlete · ‎07-09-2015

I'm starting to think that a rebuilder loan would help me since I haven't acquired much credit since my discharge over two years ago. I figured I'd have a little higher score since then but stuck in the lower 600's.

Any loans that are soft pulls? If the loan needs to be paid upfront that is not a problem. Any tips?

Any questions or info you need to see if you guys think I would benefit from one? I'll provide any info needed.

Thanks in advance.

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joltdude · ‎07-09-2015

Good thread about this

It really talks about Secured Shared Loans... but Rebuilder loans are similar, but in a rebuilder the bank basically gives you the money into a savings account but

it is frozen untill the loan is paid in full ... Usually interest bearing as well (on a sharebuilder loan)

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/penalized-for-not-having-installment-loan...

Im considering the same thing.. But I was going to do it with the Secured Share,. You basically tie up the deposit for a few weeks, and the loan is based on the deposit amount... but its more like a real loan in that you have to pay it off.. But you can always just not use the deposit once its freed up and drop it into savings and make payments monthly from there.. DO NOT.. i repeat, do not pay it off... it will undo what your trying to accomplish by paying it off early.. You need the history for it to be worthwhile...

-J

CH-7-Mission-Accomplished · ‎07-09-2015

I would not go for a share secured/rebuilding loan with any CU that wanted an HP. That is NOT the normal course. They may SP or even HP for membership, but not for a secured fixed rate loan.

Try Alliant FCU. They offer like 3% loans and terms up to eight years. You want the longest possible term with the minimal principal amount.

Ask what the minimum payment they will accept in monthly payments. If it is $10, try to get an 84 month loan for $840 @ 3%. And again, NO HP.

Most local CU's do these credit builder share secured loans (the terms are used interchangably, but usually you have to give them the cash and then they give it back to you)

Some credit unions only want to give you a 6 or 12 month loan. Don't do this. The point is to have one in the mix. If you have to get another one in a year, your scores will drop for a while. Also, don't ask for one dollar more than you need (payment X loan term in months). You get no kudos for getting a 5K credit builder paid off in 12 months. You are better with a $500 loan with $10 payments for 50 months.

And remember, the rate should be no higher than the BEST rates available on new auto loans for the same term. Cash security is better security than a car. Don't accept 6% or 10% or 15%. You need only pay 2% - 3.5% in today's market.

So for a fixed rate rebuilder:

Absolutely no HPs.

Anonymous · ‎07-09-2015

I have a $2000 two year term 4% APR secured installment loan with a bank. It's interest only, so the payment reports very tiny, (currently $3), making the DTI look good.

Broke_Triathlete · ‎07-09-2015

Thanks for the input guys. Now that I technically have an installment loan already (student) is opening another one going to help?

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CH-7-Mission-Accomplished · ‎07-10-2015

@Broke_Triathlete wrote:
Thanks for the input guys. Now that I technically have an installment loan already (student) is opening another one going to help?

The conventional wisdom is no, if you already have an auto loan or a student loan or some other non-mortgage installment loan reporting, then you do not need a credit builder loan.

What sometimes makes me wonder is that when people have two or three installment loans, and then pay one off (with the others still reporting) sometimes their score will drop. I'm not sure why this would happen when they have other installment loans.

Still, installment loans always cost interest, so I would stick with one. But if you know one will be maturing in say six months, I would open a new 60-month or whatever long term builder loan at that point, six months before the old one pays off, so there is no gap and the new one can season a little bit before the old one falls off.

Broke_Triathlete · ‎07-10-2015

@CH-7-Mission-Accomplished wrote:
@Broke_Triathlete wrote:
Thanks for the input guys. Now that I technically have an installment loan already (student) is opening another one going to help?
The conventional wisdom is no, if you already have an auto loan or a student loan or some other non-mortgage installment loan reporting, then you do not need a credit builder loan.

What sometimes makes me wonder is that when people have two or three installment loans, and then pay one off (with the others still reporting) sometimes their score will drop. I'm not sure why this would happen when they have other installment loans.

Still, installment loans always cost interest, so I would stick with one. But if you know one will be maturing in say six months, I would open a new 60-month or whatever long term builder loan at that point, six months before the old one pays off, so there is no gap and the new one can season a little bit before the old one falls off.

Thanks for the input. Yea I'll be paying on that for a million years. Well then, I guess I'll let time do it's thing!

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Business: