I have a PenFed SSL which I opened for exactly $3,000 with a repayment period of 36 months; if I recall correctly, I had the option to go as long as 60 months, even on a $3,000 SSL, however, even the three years I opted for is overkill; I should have a mortgage and/or a car payment long before then. My way of thinking is, "why opt for a long loan, much longer than any of us can see into the future?" Said another way, if by March of 2024 I need an SSL, I'll simply open another one and then immediatly pay it down to under 9%. The only reason why I took five months to pay this one down to that point was to see if it impacted my scores as I dropped below various thresholds, and FWIW, the only one I noticed was when I went below 9% a few weeks ago; my Experian FICO 8 just bumped from 679 to 688.
@Horseshoez wrote:I have a PenFed SSL which I opened for exactly $3,000 with a repayment period of 36 months; if I recall correctly, I had the option to go as long as 60 months, even on a $3,000 SSL, however, even the three years I opted for is overkill; I should have a mortgage and/or a car payment long before then. My way of thinking is, "why opt for a long loan, much longer than any of us can see into the future?" Said another way, if by March of 2024 I need an SSL, I'll simply open another one and then immediatly pay it down to under 9%. The only reason why I took five months to pay this one down to that point was to see if it impacted my scores as I dropped below various thresholds, and FWIW, the only one I noticed was when I went below 9% a few weeks ago; my Experian FICO 8 just bumped from 679 to 688.
Agreed. I just love love love the Navy Federal Credit Union way of giving you a choice. I am banking (pun very much intended) on my current car, Bella, to last another year (and am hopeful for 15 - 18 months). I am preparing for that expense now (via budgeting so that I can purchase a car like an adult....). But, that is not the topic here. As I have stated elsewhere, the ex-wife and I finally addressed the marital home in February. There goes that "installment loan". I then paid off my car (yes, the same Bella!!! She is all mine now! LOL) and bam! There went the last installment loan.
So, this SSL from NFCU really fills the void. And doing the 15 months (which is really 16 months because of NFCU adding one extra month) fits my situation perfectly. Well, what I *think* - right now - what "perfectly" might mean to me in the future! Yikes! That can be a scary sentence!
Starting Score: Exp 627
Navy SSL is very well documented on this forum. O/T
My reasoning for scraping together the largest loan I could muster? I picture myself, speaking to underwriting in a year or two regarding a loan app I'm marginally qualified for, and they say:
"Yes, you have a 761 score w/ 100% history, but I'm looking here & you've only had two loans... one for $500 and one for $2000. And now you're asking for $18,000?" (I've had this conversation a decade ago and it didn't go so well). Showing responsible payment history on a 'larger' loan would have 100% helped in my negotiations. My CU still does manual underwriting in-house, and the branch manager means business when he looks you in the eye, tells you what's up, and gives you a fist bump.
Likewise in automated decisions, if 'the algorithm' considers large denominators, it'll help. I work in data science... I guarantee most, if not all, proprietary algorithms consider every single data point available to them, including prior loan amounts. You read all the time "most credit card SLs will be in line with your existing CLs", and this is why.
If you only care for the FICO score X point boost, then a $500 SSL will do the job, as far as I can tell.
@morethan20yaks wrote:Navy SSL is very well documented on this forum. O/T
My reasoning for scraping together the largest loan I could muster? I picture myself, speaking to underwriting in a year or two regarding a loan app I'm marginally qualified for, and they say:
"Yes, you have a 761 score w/ 100% history, but I'm looking here & you've only had two loans... one for $500 and one for $2000. And now you're asking for $18,000?" (I've had this conversation a decade ago and it didn't go so well). Showing responsible payment history on a 'larger' loan would have 100% helped in my negotiations. My CU still does manual underwriting in-house, and the branch manager means business when he looks you in the eye, tells you what's up, and gives you a fist bump.
Likewise in automated decisions, if 'the algorithm' considers large denominators, it'll help. I work in data science... I guarantee most, if not all, proprietary algorithms consider every single data point available to them, including prior loan amounts. You read all the time "most credit card SLs will be in line with your existing CLs", and this is why.
If you only care for the FICO score X point boost, then a $500 SSL will do the job, as far as I can tell.
Excellent journey. And amazing results. But, expected (that is a strong word...but let's go with it here) as well. I figured that you worked in some sort of "engineering/science" capacity. Your posts are extremely logical and very well laid-out. Even this old man's brain can very nicely follow.
And I really like your reasoning for going for a larger sum Loan. And the analogy that you used is dead-on perfect. We do see that all of the time. "Birds of a feather" and all that jazz!
I wonder who in this forum is the loan expert? I can think of two or three but that is more for a different aspect.
Well done! And great post with excellent (and most pertinent) detail.
Approved for the 8K signature loan! They pulled some flavor of EQ, which came back as 773! Highest I've ever seen. That qualified me for the lowest rate 8.99% & 48 month term. Excellent. I set autopay for an 18 month payoff, and may reduce that to 12, depending on how a few budgetary considerations shake out.
Decided I'm not going to pull the trigger on another SSL. I have some other ideas, but I'm going to let them stew a while.
One last DP - I changed my AZEO card, which left me AZ for 2 weeks in the middle of October. My EX8 score went down 13 points as soon as my balance reported zero. When my new AZEO card updated November 1, I went back up 16 points to 764 (a record). I reckon this was the 13~ azeo points, +1 month aging factors, and/or my Disco unsecuring with a $1200 CLI. Good to know I can count on about a dozen points by utilizing the AZEO strategy. (-13 EX8, -12 TU8, -1 EQ9)
Thanks.
@Horseshoez wrote:
@morethan20yaks wrote:
Next steps: Opening a NFCU account and switching over my direct deposit, then applying for the largest SSL I can scrape together (10-12K)...
Question for both @morethan20yaks and anybody else seeing this thread, "Is there any evidence a Secured loan above say $3,000 helps accelerate growth in credit scores?
I ask because I'm curious why you wouldn't just open a lower limit SSL and then invest the rest of the money elsewhere?
When you pay down the loan to 8.9% or less with NFCU you get the money back as soon as it posts, and the length of the loan is determined by the original amount (for example the LEAST I could pay for a 60mo SSL was $3,001).
All the while you're getting ✅ every month.
So being that you get all back but 8.9% or so, almost immediately, the real question is how long would like it to report.
In another post you said:
"Said another way, if by March of 2024 I need an SSL, I'll simply open another one and then immediatly pay it down to under 9%."
Seems to me it's easier to take a longer loan and pay it off to closed, as needed, than it is to realize you came up short, need to take another HP and add a new account to your file driving down AoYA and AAoA's.
@PicoFico wrote:
@Horseshoez wrote:
@morethan20yaks wrote:
Next steps: Opening a NFCU account and switching over my direct deposit, then applying for the largest SSL I can scrape together (10-12K)...
Question for both @morethan20yaks and anybody else seeing this thread, "Is there any evidence a Secured loan above say $3,000 helps accelerate growth in credit scores?
I ask because I'm curious why you wouldn't just open a lower limit SSL and then invest the rest of the money elsewhere?
When you pay down the loan to 8.9% or less with NFCU you get the money back as soon as it posts
Precisely. Whether the denominator started as $3,000 or $12,000, I have the same $300~ tied up and it's costing me the same 0.55 cents per month in interest. A small price and I'm happy to pay it.
The only downside to a large-SSL that you don't read about much is DTI. Doesn't matter I don't OWE a payment until 2026 - or that my effective payment is only $5/month to get dem ✅✅✅s for the next 55 months - The credit bureaus still report a 'hefty' $212 monthly obligation, which is thus used in DTI calculations. Hasn't affected me yet, and I don't think it will, but it could. No biggie, I'll PIF if that day ever comes.
I'm glad I did it. Now my installment lineup look like:
1) $500 unsecured PIF
2) $2000 unsecured PIF
3) $12000 secured
4) $8000 unsecured
I'll probably pay off 3 & 4 around the same time, leaving me with zero~ DTI and 4 recent & varied installment loans (including one that's 5 digits, driving up the average). A relatively strong position, me hopes.
Cheers.
800 ahoy! 22 months strong.
A few thoughts: The large SSL w/ super low utilization & a 'large' monthly payment doesn't count as DTI by most underwriting standards.
Because: 12K SSL reports a $200~ payment. My util is 250/12000, so underwriters consider it to be PIF in 60 days, thus do not include it in my DTI. They don't know it's on $5 autopay, or care.
That was my sole concern. I now see zero reason not to scrape together the largest SSL you can manage. I'm certain it bolstered my credibility, sitting in a bank office asking for 15k cash, listening to the manual underwriter read out loud my otherwise thin-file [approved]. And it's most-likely tasty food for algorithms, too. No regurts.
Happy New Year, all
@morethan20yaks wrote:
That was my sole concern. I now see zero reason not to scrape together the largest SSL you can manage. I'm certain it bolstered my credibility, sitting in a bank office asking for 15k cash, listening to the manual underwriter read out loud my otherwise thin-file [approved]. And it's most-likely tasty food for algorithms, too. No regurts.
Congratulations on the 800!
I would argue a $500 SSL would have given you the exact same bump as a five-figure SSL. I opted for a $3,000 SSL in 2021 and by early 2022 all of my FICO scores were somewhere between 810 and 850+ (for the scores which can go higher).