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Advice Please Installment Loan

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Advice Please Installment Loan

I have relatively strong credit score (high 700's), utilization near zero and all is good.

But, I don't have any installment loans.

 

One of my revolving account banks (PenFed) recently sent me a pre-approval on a personal loan up to 25K.   No gimimck, spend anyway I want etc.   I can set the durtion to up to 60 months.   Terms are NOT good (9.9%)

 

I have no need for a loan (actually I do have some upcoming expenses that I could put 10K to use for a month or two, but I certainly don't need it and no pain in my life without the loan.)

 

Finally to my question,

Should I take this offer, put the cash in my bank account.   Within a couple months pay back a HUGE percentage of the loan and then pay the tiny balance off over an extended time  -->with the goal of having an almost paid-off installment loan on my credit file for an extended time?

 

Here are my naive thoughts

--No credit check, I'm pre approved.  ..so no HP ding.

--New account will affect my score(?) (or will it? it's not a revolving account)

--Interest, I'll be paying a couple bucks in interest, but nothing significant cuz I'll immediatly pay off the vast majority of the loan even at 9.9% the tiny balance will create miniscule interest.

 

My gut tells me it's not worth messing with ...but am I missing an opportunity by not taking this offer and using it to have a solid installment loan on my credit file.

 

Any wisdom, (especially good wisdom LOL) appreciated.

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17 REPLIES 17
Established Contributor

Re: Advice Please Installment Loan

To put it succinctly, I do not think it's worth it to pay money to improve your credit when you already qualify for top tier credit. 

Message 2 of 18
Community Leader
Super Contributor

Re: Advice Please Installment Loan

I wouldn’t borrow money that I didn’t need.

It’s nice to be in this position, isn’t it? Enjoy your CC/PL basically debt-free existence. 😁
GOALS: Garden til APR 2020 and 800 Club


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Message 3 of 18
Valued Contributor

Re: Advice Please Installment Loan

I see you're a member of Navy. They have the SSL 2.25% apr for 5 years. Prepayment does push out the due date. No hard pull but new account will reset your AoYA.

Getting back to PenFed. Data points show Prepayment also pushes out the due date. Loan check is not a true SSL but reacts very similar. Same pros as Navy only negative is higher apr. Maybe $25k is nice to have as extra padding.

In summary, if no access to Navy, PenFed would be a great 2nd alternative.

You can expect FICO score boost +-30 points, depending on profile.

There's also a TX CU that does 10 year SSL.

ETA depending on SSL amount, I've paid 11 months of interest at $8 total so far for +- 30 FICO points.
Message 4 of 18
Community Leader
Super Contributor

Re: Advice Please Installment Loan

If your scores are in the high 700s, why do you need to optimize them? Are you planning to apply for something big? Anything over 750 already gets you the best rates. Once you start getting close to 800, it seems you take a bigger hit from cutting your AAoA than any boost you would get, at least that's what I've noticed.







Message 5 of 18
Valued Contributor

Re: Advice Please Installment Loan

^ in the words of Brian_Earl_Spilner, because its Gucci?
Message 6 of 18
Community Leader
Super Contributor

Re: Advice Please Installment Loan


@AllZero wrote:
^ in the words of Brian_Earl_Spilner, because its Gucci?

Well, that makes sense then







Message 7 of 18
New Contributor

Re: Advice Please Installment Loan

Congrats on the 25k loan pre approval. I’m with PenFed and sure wish they’d send me that 25k loan preApproval. High 700’s means like 780 ish? I’m at 723 Fico 9 at Pen Fed but I guess when I get to over 750 then I will qualify for the 25K loan. Nice !!!
Message 8 of 18
New Contributor

Re: Advice Please Installment Loan

I just logged into my account at PenFed my new Fico 9 score is 728 but the only offers are for auto loan, mortgage and Power Cash which I was just approved for last month. How can I get that 25k loan offer like you my friend?
Message 9 of 18
Established Contributor

Re: Advice Please Installment Loan


@AllZero wrote:
You can expect FICO score boost +-30 points, depending on profile.

The key word's are "depending on profile".

When I paid off two houses, and two cars, I went from 4 loans --> none.

Lost 12 points and because of just aging, two years out, I am within 5 points of my starting scores.

Loss of installment loans was extremely small for my profile.

Twelve points is not worth getting a loan that I don't need.

 

FNBO 2% Cashback Visa (20k) / Bank of the West Cashback MC (20k)
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Ficos : 840 / AAoA : 9 yrs / AoOA : 23 Yrs / AoYA : 3
Message 10 of 18
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