Advice re: getting an SSL to improve FICO

[Auricom]

Hello! I’m looking for some advice; any help is greatly appreciated.

My scores:
FICO 8 EX: 768
FICO 8 TU: 789
I only have scores for EX and TU, I expect EQ to be similar to EX based on what I see on my FAKOs.

7 CCs with a total revolving limit of just over 150K — util at statement cut date is usually 0-1%
8 closed, PIF student loans reporting
1 inquiry on EQ/EX hitting the one-year mark in May
0 derogs

AAoA = 4yr 4mo — this is just CCs, I have no open installment loans whatsoever — my wife may be willing to add me as AU to one or two of her older cards to get my AAoA up a bit
AoOA = 7yr 2mo — oldest open
AoOA = 11yr 6mo — oldest closed, closed 7-8yr ago
Newest TL = 1mo — luckily this account opened with no HP

My problem is the lack of open installment loans. I wanted to keep some student loans open for the long run with a low balance but the servicer closed them out once they got close to PIF. When my student loans hit PIF, my score dropped ~10pts, but has grown up since then likely due to AAoA growth, consistent on-time payment, and low util.

Goal: improve credit mix, increase FICO, get mortgage in 8-18 months

I’m a new member of NFCU and looking at getting an SSL to build installment history. Doing so would bring my AAoA to below the 4yr mark for about 2-3 months.
I don’t believe NFCU does a HP for SSLs.

NFCU’s SSL terms seem to mirror what Aliant used to offer.

Some questions:
1 - If I’m looking to get a mortgage in 8-18 months, would it be wise to open an SSL now? I have no open installment and this is always what dings me. Downside will be a drop in AAoA, upside will be credit mix.
2 - Would a mortgage underwriter look at an SSL sitting around with 95% paid off as weird / an obvious hack?
3 - I can move a good chunk of change to NFCU so that I can access a high-dollar SSL. The benefit to these is that they can reach repayment terms of 15yr. Would this be helpful? Would a 30k loan hurt DTI?
4 - Supposedly any loan over $10k will require the lender to ask additional questions for legal reasons. SSLs apparenrly don’t need HPs, but do large ones need HPs?
5 - When applying for an SSL, would the lender think it’s weird if I said “I want to borrow $30k just so that I can pay it back to you and help build credit”?

Thank you!!

[SouthJamaica]

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@Auricom wrote:

Hello! I’m looking for some advice; any help is greatly appreciated.

My scores:
FICO 8 EX: 768
FICO 8 TU: 789
I only have scores for EX and TU, I expect EQ to be similar to EX based on what I see on my FAKOs.

7 CCs with a total revolving limit of just over 150K — util at statement cut date is usually 0-1%
8 closed, PIF student loans reporting
1 inquiry on EQ/EX hitting the one-year mark in May
0 derogs

AAoA = 4yr 4mo — this is just CCs, I have no open installment loans whatsoever — my wife may be willing to add me as AU to one or two of her older cards to get my AAoA up a bit
AoOA = 7yr 2mo — oldest open
AoOA = 11yr 6mo — oldest closed, closed 7-8yr ago
Newest TL = 1mo — luckily this account opened with no HP

My problem is the lack of open installment loans. I wanted to keep some student loans open for the long run with a low balance but the servicer closed them out once they got close to PIF. When my student loans hit PIF, my score dropped ~10pts, but has grown up since then likely due to AAoA growth, consistent on-time payment, and low util.

Goal: improve credit mix, increase FICO, get mortgage in 8-18 months

I’m a new member of NFCU and looking at getting an SSL to build installment history. Doing so would bring my AAoA to below the 4yr mark for about 2-3 months.
I don’t believe NFCU does a HP for SSLs.

NFCU’s SSL terms seem to mirror what Aliant used to offer.

Some questions:
1 - If I’m looking to get a mortgage in 8-18 months, would it be wise to open an SSL now? I have no open installment and this is always what dings me. Downside will be a drop in AAoA, upside will be credit mix.

No. The "reindeer games" SSL trick only really works with the FICO 8's. It has little effect on the mortgage scores.

2 - Would a mortgage underwriter look at an SSL sitting around with 95% paid off as weird / an obvious hack?

Yes

3 - I can move a good chunk of change to NFCU so that I can access a high-dollar SSL. The benefit to these is that they can reach repayment terms of 15yr. Would this be helpful? Would a 30k loan hurt DTI?

Yes it would because the amount of the monthly payment stays the same. But for the reasons expressed, don't bother with the SSL thing, at least not for mortgage purposes.

4 - Supposedly any loan over $10k will require the lender to ask additional questions for legal reasons. SSLs apparenrly don’t need HPs, but do large ones need HPs?

I don't know. Mine was $3010 and didn't require an HP.

5 - When applying for an SSL, would the lender think it’s weird if I said “I want to borrow $30k just so that I can pay it back to you and help build credit”?

Yes.

Thank you!!

Bottom line: don't bother. The only guaranteed effects it would have on your mortgage scores are:

(a) reset the age of youngest account

(b) lower your average age of accounts

Both of which are real bad for mortgage scores.

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[Auricom]

Thank you! Your insight is invaluable.

[Anonymous]

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@Auricom wrote:

.... my problem is the lack of open installment loans. I wanted to keep some student loans open for the long run with a low balance but the servicer closed them out once they got close to PIF. When my student loans hit PIF, my score dropped ~10pts, but has grown up since then likely due to AAoA growth, consistent on-time payment, and low util.

Goal: improve credit mix, increase FICO, get mortgage in 8-18 months

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Your credit mix is fine for any FICO model, since you have closed loans on your report in good standing.  FICO 8 has an additional scoring factor it looks at (which is not in Credit Mix category, but rather in the Amounts Owed category).  That factor looks at your open loans to see how much of them you have paid off.

I'd very much like to hear more about what happened with the student loans.  Did you pay them down to a very low amount (with a big extra payment) or were they just naturally reaching the end of their term?  What was the balance on each loan (and what was the original loan amount) when the loan handler closed them prematurely?

As far as your mortgage pre goes, SouthJ gives you great advice.  The only mistake was opening the new account.  FICO models (especially the mortgage models) really like it when your youngest account is > 12 months old.

You will likely be fine regardless.

[Auricom]

To be honest, I'm not entirely sure what happened to the student loans...

I had four student loans, originally serviced by Dept of Ed. but they sold the debt to a third-party servicer (hence 8 TLs reporting).

This was shortly after college:

Once I built my savings account to 6 weeks' expenses, I started aggressively paying off my student loans, which had an interest rate of 6.8%. I was paying about 30% of my salary to rent, 50% to student loans, and 20% to daily expenses and savings.

I had paid off two, maybe three loans when I started reading these forums. Because I was paying so aggressively but my loan term was not shrinking, I ended up with maybe ~7yrs of $0 minimum payment before I'd have to pay off the final few months. I realized I could keep this TL open with a low util for 7 yrs and benefit my scores, so when I got close to PIF the fourth loan, I decided to make one big payment and intentionally underpay by about $30: just enough to keep the account open but not enough to make the interest painful.

Next thing I know, I get an email thanking me for paying off my loan! At the time, here's what I guessed happened: I think the amount due displayed on the site was an estimate of some kind, e.g. perhaps it was an estimate of what the total debt would be at the end of the month (and maybe I paid at the beginning of the month?).

If that wasn't the case, it's possible that the servicer decided to forgive me the remaining $30 because they decided the administrative work of maintaining a $30 loan for 7 years isn't worth it.

Anyway it bummed me out, and I had to spend way too much time explaining to my girlfriend why I was upset that I'd paid off my last student loan.

[Auricom]

While we're here, should I get my wife to add me as an AU (and me add her as an AU) on any accounts older than our AAoA, in order to drive up AAoA? Will this help? Do AU accounts ever show as new TLs? One is Amex, which I think might.

[Anonymous]

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@Auricom wrote:

it's possible that the servicer decided to forgive me the remaining $30 because they decided the administrative work of maintaining a $30 loan for 7 years isn't worth it.

Yes.  This is what likely happened.  A lot of people advise newcomers to lower their loan balances to a very small balance.  But that often results in the loan handler forgiving the remaining balance.  I keep warning people about that as a risk, but that message isn't communicated by everyone.

The solution appears to be to lower the balance a lot but still make sure it is greater than the original monthly payment (and also make sure that the balance is > $30).  By avoiding an ultra tiny balance, you sharply reduce the chance that the loan handler will forgive the remainder.

[Anonymous]

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@Auricom wrote:

While we're here, should I get my wife to add me as an AU (and me add her as an AU) on any accounts older than our AAoA, in order to drive up AAoA? Will this help? Do AU accounts ever show as new TLs? One is Amex, which I think might.

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I believe you are right about Amex.  That's what I have heard.

When a person is considering AU-adding primarily or solely for its capacity to boost credit scoring, he should look to be added to a card for which all of the following are true:

(1) A card that is much older than his oldest account.  (Example: his oldest account is 2 years old and he is added to his mom's card, which is 18 years old.)

(2)  A card that is clean: no lates on it ever (at least for the last 7 years).

(3)  A card that can be kept at a very low reported balance (and a zero reported balance is even better).

Note that the key factor in #1 is Age of Oldest Account, not AAoA.  That's what matters most using this scoring trick.  Unless you can find a card that is much older than your oldest account, I think this scoring trick isn't worth doing.  (I can think of a few exceptions, but I doubt they apply to you.)