Advice on getting a loan solely to improve score

[Anonymous]

I'm looking to open some sort of loan for the sake of improving my credit score.

I currently have 3 credit cards and the main thing hurting my score - besides time - is no history with loans. I got an Amex Blue Cash Everyday card last month, at which time my FICO score was 755 as per Equifax. My oldest card is less than two years old and I've never had a loan, and the latter specifically was mentioned as a reason my auto insurance is higher than it needs to be.

It's been advised I set up a savings account at Alliant Credit Union and then take out a secured loan against the savings account. Two problems I'm encountering with that - 1) My income is so low that having $500 in savings is barely doable, plus it would need to be readily available for emergency use, and 2) My total assets for all accounts cannot exceed $2000 for more than a few weeks. I live off $733/onth SSI and I'd lose a month of income if I violated that.

So, I'm nervous about how tied up the carefully scraped together $500 savings would be, and also concerned the additional $500 might put me over the $2000 limit. Regarding the latter, would it work to immediately pay back most of it, is there a recommended time to wait beore paying off the majority of it?

Or is there a diferent approach that could be recommended that might work better with my situation?

[Anonymous]

Do you have a goal in mind that requires you to raise your score?

At 755, securing a loan for the sake of raising it doesn't seem like a good trade-off, considering your circumstances. If that's you're true FICO score, you're sitting at a good place. Adding a loan with financial uncertainty could run the risk of dropping your score. 

Edited to add: how much higher is your auto insurance? They should be able to tell you how much extra you're paying.

[darwin_wins]

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@Anonymous wrote:

I'm looking to open some sort of loan for the sake of improving my credit score.

I currently have 3 credit cards and the main thing hurting my score - besides time - is no history with loans. I got an Amex Blue Cash Everyday card last month, at which time my FICO score was 755 as per Equifax. My oldest card is less than two years old and I've never had a loan, and the latter specifically was mentioned as a reason my auto insurance is higher than it needs to be.

It's been advised I set up a savings account at Alliant Credit Union and then take out a secured loan against the savings account. Two problems I'm encountering with that - 1) My income is so low that having $500 in savings is barely doable, plus it would need to be readily available for emergency use, and 2) My total assets for all accounts cannot exceed $2000 for more than a few weeks. I live off $733/onth SSI and I'd lose a month of income if I violated that.

So, I'm nervous about how tied up the carefully scraped together $500 savings would be, and also concerned the additional $500 might put me over the $2000 limit. Regarding the latter, would it work to immediately pay back most of it, is there a recommended time to wait beore paying off the majority of it?

Or is there a diferent approach that could be recommended that might work better with my situation?

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Here is what I did just to add to the mix of things. I have NFCU and the minimum secured loan was 250 which I took for 6 months with 2% interest which I had no issue with.

If you can secure a secured loan like I got it shouldn't put you over your 2000 limit?

[Anonymous]

their is a company called self lender who open a savings account in your name for $1,100. it costs $60 to start up and your monthly payments are $98. After 11 months they will mail you a check for the savings account. I think they report as secured though.

[Anonymous]

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@Anonymous wrote:

I'm looking to open some sort of loan for the sake of improving my credit score.

I currently have 3 credit cards and the main thing hurting my score - besides time - is no history with loans. I got an Amex Blue Cash Everyday card last month, at which time my FICO score was 755 as per Equifax. My oldest card is less than two years old and I've never had a loan, and the latter specifically was mentioned as a reason my auto insurance is higher than it needs to be.

It's been advised I set up a savings account at Alliant Credit Union and then take out a secured loan against the savings account. Two problems I'm encountering with that - 1) My income is so low that having $500 in savings is barely doable, plus it would need to be readily available for emergency use, and 2) My total assets for all accounts cannot exceed $2000 for more than a few weeks. I live off $733/onth SSI and I'd lose a month of income if I violated that.

So, I'm nervous about how tied up the carefully scraped together $500 savings would be, and also concerned the additional $500 might put me over the $2000 limit. Regarding the latter, would it work to immediately pay back most of it, is there a recommended time to wait beore paying off the majority of it?

Or is there a diferent approach that could be recommended that might work better with my situation?

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Honestly, I would not put much stock in that statement. Such statements are usually simply parroting what FICO says is most negatively effecting your scores. If your current scores are already in the mid-700's then you are probably already sitting in the one of the top rate tiers anyway, and improving your score is not likely to get you much of a break on rates.

[Anonymous]

Thanks everyone, I didn't think to ask specifically how much more i'm paying because of it. Looks like that's the next step. My goal wuold be to reduce auto insurance.

And I was misremembering the numbers, was 744, not 755.

[Anonymous]

You can go to credit union.  Open a savings of 500 and get a secured loan of 500 against the savings.  Thats what I just did.

[Anonymous]

So, I finally managed to follow up on this, and it all amounts to they don't have the faintest clue. The insurance was unable to tell me how much the rate would decrease with an improved credit score.

[Anonymous]

That would certianly work well,

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@darwin_wins wrote:

Here is what I did just to add to the mix of things. I have NFCU and the minimum secured loan was 250 which I took for 6 months with 2% interest which I had no issue with.

If you can secure a secured loan like I got it shouldn't put you over your 2000 limit?

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That would certainly work well for me, but I have yet to find anything similar. I don't qualify to join NFCU. Glad you've got that, though!

[Anonymous]

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@Anonymous wrote:

That would certianly work well,

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@darwin_wins wrote:

Here is what I did just to add to the mix of things. I have NFCU and the minimum secured loan was 250 which I took for 6 months with 2% interest which I had no issue with.

If you can secure a secured loan like I got it shouldn't put you over your 2000 limit?

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That would certainly work well for me, but I have yet to find anything similar. I don't qualify to join NFCU. Glad you've got that, though!

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Try SDFCU. Anyone can qualify for membership by joining the American Consumer Council. They will do $500 secured loans at 3.99% for 36 months. I works out to under $15 a month payments. AND, you will have IMMEDIATE use of the loan proceeds, so you are really only tying up the $500 for a few days that it take for the loan to process. You only need make the first three payments out of pocket, then you will have enough of the saving freed up that you can just set up automatice payments from the savings account.