New to the US, optimizing SSL for a boosted score?

[CreditChump]

Hi all,

I have been a resident in US for a few months and I am trying to build my credit, really appreciating this forum so far!

Right now my only credit is an American Express charge card which I have had since I arrived through their global card transfer program, I put all spend on this and pay it off in full every month via autopay, within the next two years there are 3–5 credit cards I am hoping to get overall.

In the meantime, I would also like to boost my score with a share secured loan (SSL), is anybody able to confirm that my approach here is correct?

1. Open a PenFed savings account with a $5 membership deposit
2. Add some additional cash for a share secured loan (it looks like $3600 ($25 per month for 144 months) should be a an easy longterm amount to process)
3. Wait 30 days as per PenFed's requirement and open the share secured loan (over the phone, it is not listed on the website)
4. Immediately pay the loan down to $320.40 (8.9%)
5. Assuming an interest rate of 2.05%, set up automatic payments of $2.51 per month which should fully pay off the loan in the 144th month (a total of $41.04 interest paid, so an ongoing cost of about $0.29 per month to maintain a FICO score boost)

Is this the correct approach or have I missed something? Also, might there be any better lender than PenFed for this (there does not seem to be any way for me to get NFCU) and are there any benefits to using any different numbers for the loan? For example if I do a $10,000 loan amount then might any credit card lenders offer higher limits based on this? Also are there any disadvantages to doing this?

Thanks

[Anonymous]

@CreditChump  Regarding another lender, I recommend Andrews FCU. Andrews is open to everyone. Furthermore, they do not pull your credit for secured loans. This means you can obtain this loan and not suffer a hard pull on your credit report.

[CreditChump]

Thanks @Anonymous, I just had a look over their page and their SSL offering seems to be basically exactly the same PenFed's so I am not sure how I will decide, however could you please clarify what you mean by "Andrews is open to everyone"? Their membership eligibility requirements suggest that that I should not be able to join.

Also do you have any thoughts about my other questions (e.g. loan amount)?

[Anonymous]

@CreditChump  One of the membership eligibilities for Andrews FCU is the American Consumer Council. Please see the link below. Click on the link. Then scroll down to American Consumer Counsel Information. Regarding your other question, regrettably I am unable to answer.

https://www.andrewsfcu.org/Learn/Inside-Andrews/Membership

[Ilinferno]

@CreditChump 

I did a SSL with Navy Federal in December last year near the beginning of my rebuild. I don't know that there is a concrete answer as to whether a higher amount SSL will get you higher limit cards because every lenders criteria is different but I figured that it definitely couldn't hurt my chances either. I ended up doing 25k for 61 months and paying down to below 9%. I got a 29 point bump in my scores and do feel like it made a difference in some of the higher limit cards I got. The next card I applied for after the loan  was reporting on my credit reports was the FNBO Evergreen card. My highest limit on cards up until this point was 5k and they gave me 14k. I also just got approved for Affinity Cash Rewards for 25k when based on data points I have seen in the forums they tend to base how much they give you on an average of the limits of your other cards and can be hard to get approved for. I don't see how I could have been approved for such a high limit without the chunky SSL that I did. The point gain that you will get will be the same regardless of how much you put into it but personally I think it is worth it to put a bit more on the SSL to improve your chances. Just my opinion based on how my rebuild has been going. Good luck.

[SouthJamaica]

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@CreditChump wrote:

Hi all,

I have been a resident in US for a few months and I am trying to build my credit, really appreciating this forum so far!

Right now my only credit is an American Express charge card which I have had since I arrived through their global card transfer program, I put all spend on this and pay it off in full every month via autopay, within the next two years there are 3–5 credit cards I am hoping to get overall.

In the meantime, I would also like to boost my score with a share secured loan (SSL), is anybody able to confirm that my approach here is correct?

1. Open a PenFed savings account with a $5 membership deposit
2. Add some additional cash for a share secured loan (it looks like $3600 ($25 per month for 144 months) should be a an easy longterm amount to process)
3. Wait 30 days as per PenFed's requirement and open the share secured loan (over the phone, it is not listed on the website)
4. Immediately pay the loan down to $320.40 (8.9%)
5. Assuming an interest rate of 2.05%, set up automatic payments of $2.51 per month which should fully pay off the loan in the 144th month (a total of $41.04 interest paid, so an ongoing cost of about $0.29 per month to maintain a FICO score boost)

Is this the correct approach or have I missed something? Also, might there be any better lender than PenFed for this (there does not seem to be any way for me to get NFCU) and are there any benefits to using any different numbers for the loan? For example if I do a $10,000 loan amount then might any credit card lenders offer higher limits based on this? Also are there any disadvantages to doing this?

Thanks

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It sounds like the correct approach, but I have no personal experience doing it with PenFed. I've done it only with Alliant and NFCU.