loan question

[Anonymous]

so me and my gf are taking out a personal loan from here credit union. she is using here CD to secure it. we have not done it yet but plan to later this week. we just went today to make sure we can secure it and have both of our names on the loan and we can. we aren't gonna spend any and just pay it back with the money borrowed.

So we are taking out 5000 for 9 months at 4.45%

we used a loan calculator from bankrate.com and it said our payments should be $565.91 for all 9 months. and the total we pay in interest is $93.17.

Does that sound about right?

will this loan show as a secure loan? and if it does will that affect us negatively?

also, will paying the loan off in 6 months be a positive or should we just pay it all 9 months?

[RobertEG]

I presume from you post that, since you have no intention of spending the money, that you are doing this strictly for FICO reasons to add an installment loan to your credit mix, and to establish a prior installment loan history for future manual reviews of  your CR.

Strictly from a FICO perspective, I personally see little advantage in spending $93 just for this reason alone.  As soon as you open the loan, it will probably add an inquiry  to your report to get the loan, which will hurt your score for 12 months, and will give you a new TL with zero credit history, which will negatively impact your avg length of credit for a while to come, particuarly if it is not already high.  Sure, you will get some brief benefit for credit mix, but if you then close it out in 6-9 months, that credit mix will be gone.  While open, it will give you a high intital %util on installment util. 

IMHO, the disadvantages of opening an account not needed far outweight the minimal advantage and short-lived improvement in credit mix, which is a minor art of FICO.  And it will cost you $$.  I dont see it.

[Anonymous]

the main purpose of this is to put HISTORY on the report.

i use to sell cars. People with just a few cards for a year were always considered first time buyers. you know what that means right. NO LEASING, 10 percent down or more, 18-22% interest.

But when people had even a little bit more history; little longer on the revolving, HIGHER limits, INSTALLMENT accounts (currently open or old) we can usually get them done A or B tier on buying and LEASING.

im just trying to add some history so when i get my first car within the next 12 months i can just Lease A tier no problems. She will benefit in the same way also.

$93 is nothing over 9 months. that means we each save 5 bucks a month and woo hoo that $93 is covered.

now is some1 able to answer my other questions

will this loan show as a secure loan? and if it does will that affect us negatively?

also, will paying the loan off in 6 months be a positive or should we just pay it all 9 months?

Message Edited by ruggiero06 on 07-30-2008 08:50 AM