NFCU Pledge Loan timing and strategy

[Admiral88]

Hello All,

Current Scores

FICO 8              Equifax 645, Transunion 656, Experian 675

FICO 5,4,2      Equifax 687,  Transunion 698, Experian 689

Just recently began the process of building my credit back. I am considering a pledge loan through NFCU and am hoping this forum may help with the decision. The tentative plan is to take out $3,001+ loan for 60 months and pay it down to below 9% in one lump sum.

A few questions I have regarding taking it out:

 1.) I most likely be applying for a mortgage in about 6 months. Will the negative impact of the debt on my credit be offset by the positive impact of paying it down in such a short time frame? The last thing I want is to decrease my score without it being able to rebound in time.

2.) I have heard that it is best to let the full loan balance be reported. i.e. wait 30-45 days THEN pay it down to below 9%. Thoughts regaring if this is necessary and the best approach? Also, if NFCU reports at End of Month can I pay it down sooner if I open it now towards the end of March?

I greatly appreciate any advice from anyone.

[JoeRockhead]

You don't need to wait and have it report the full balance before paying it down... The more important thing would be that if you're planning on a mortgage in six months, I'd very strongly recommend against any new credit accounts at all until after your mortgage has closed.

[GZG]

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@Admiral88 wrote:

 1.) I most likely be applying for a mortgage in about 6 months. Will the negative impact of the debt on my credit be offset by the positive impact of paying it down in such a short time frame? The last thing I want is to decrease my score without it being able to rebound in time.

2.) I have heard that it is best to let the full loan balance be reported. i.e. wait 30-45 days THEN pay it down to below 9%. Thoughts regaring if this is necessary and the best approach? Also, if NFCU reports at End of Month can I pay it down sooner if I open it now towards the end of March?

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there's no reason not to pay it down immediately or to have it show the balance for the first month, NFCU reports after your statement date, they don't arbitrarily report at the end of the month, I would just pay it as soon as you get the funds and you can pay it down.

as for if it's a good idea, I would guess not inside of 12 months for a mortgage, but hopefully some of the other people here more knowledgeable about the nuances of mortgage scores should have insight like above ^^^

[JoeRockhead]

I also forgot to ask, or comment that if you already have an open loan... the SSL (pledge) loan isn't going to gain the max scoring benefits. This only applies when it's your only open loan. If you do the loan now, I'd push off the mortgage for a year from when you open the SSL.

[pizzadude]

I'm not sure there will be a net positive impact to your FICO 5,4,2 scores in 6 months, so if you're still planning to apply for a mortgage then I'd shelve plans for the pledge loan.

[Admiral88]

Thanks for replying, the help is sincerely appreciated. I do not currently have the SSL open, so based on the feedback here I'll probably hold off until after the my mortgage application. The only other consideration is that the SSL can improve my internal score with NFCU.

[Admiral88]

Thanks appreciate you posting and your input