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Not sure what to do? Advice please!

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savings4tomorrow
Regular Contributor

Not sure what to do? Advice please!

As part of our journey to rebuild our credit, well, rebuild mine, and just build my husbands(thin file until about a months ago when we were able to finally pull a score)-we decided to take a secured shared loan from our credit union.  We started the application process about a month ago, for some strange reason, it has taken forever to get the paperwork started and I just received the paperwork to sign and get notarized as I live in another state, blah, blah, blah.   The only reason I had applied for the loan with the credit union was because besides my student loans, which I defaulted and since has been paid in full since 2011, neither one of us have any type of loan.   Fast forward 3 weeks, I now have a new car loan  J (I know this is a bonehead move since I want to buy a house, but I NEEDED a car desperately)    Will this auto loan suffice on my credit report?  Should I get the installment loan just for my husband since he only has one secured CC in his name right now?  Or should I take the $ we were going to secure the loan with and get him another secured CC?  I know CC build your credit the best, but how important is an installment loan on your credit profile?  Thanks in advance!

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AeroKrix
Frequent Contributor

Re: Not sure what to do? Advice please!


@savings4tomorrow wrote:

As part of our journey to rebuild our credit, well, rebuild mine, and just build my husbands(thin file until about a months ago when we were able to finally pull a score)-we decided to take a secured shared loan from our credit union.  We started the application process about a month ago, for some strange reason, it has taken forever to get the paperwork started and I just received the paperwork to sign and get notarized as I live in another state, blah, blah, blah.   The only reason I had applied for the loan with the credit union was because besides my student loans, which I defaulted and since has been paid in full since 2011, neither one of us have any type of loan.   Fast forward 3 weeks, I now have a new car loan  J (I know this is a bonehead move since I want to buy a house, but I NEEDED a car desperately)    Will this auto loan suffice on my credit report?  Should I get the installment loan just for my husband since he only has one secured CC in his name right now?  Or should I take the $ we were going to secure the loan with and get him another secured CC?  I know CC build your credit the best, but how important is an installment loan on your credit profile?  Thanks in advance!


@Look into credit unions as some offer "Credit Builder" type loans. You don't put any money down into a savings or CD, but rather you make monthly payments and at the end of the loan, you get the loan amount. For example, a $3000 loan for 3 years @ 3%, you'd pay about $90/month and pay a total of $140 in interest, but once it's paid, you get the $3000. It's a great alternative to CD loans because you don't have to have the money to open the loan. Also, you build a solid payment history for 3 years. The caveat, there is usually a origination fee of $50, give or take.

 

Although, high scores can be had through CC's alone, given you build a solid payment history and keep the account in good standing and never go over the limit. It's true that a mix of CC's and installment loans can help diversify one's reports, but it's not always needed. I believe one should get an installment loan if they truly need it, or if they are able to be a co-signer and the person making the payments is responsible and trustworthy. A spouse is always the perfect candidate. 

 

A need to obtain a loan just to build credit is not advisable, IMO. You can build a solid history and score just by getting CC's. If PIF and on-time and no AF, it's a free credit building tool! So my suggestion is to skip the loan and just build through a secured cards, since his history is extremely limited. And after a year, he'll be able to obtain unsecured with ease, with good payments and history with those cards. I rebuilt through secured cards, always asking to waive the AF's. I have since been able to get unsecured cards, but still kept a few secured cards... If it's free and helping my payment history...why close them!

 

Edit: if your husband has no baddies, or a BK, I'd go with more Prime banks to get that secured card. As most will graduate your card to an unsecured version, without reapplying or closing out the secured trade line. CapOne does not graduate at all! BofA I hear is good as we'll as WF. Again, Credit Unions are always the best route if you are able to, as most offer secured cards that graduate to their unsecured.

Current 09/01/2021 EQ - 515 FAKO ; EX - 591 FICO ; TU - 598 FICO

Venmo CC $5.0K || Paypal Cashback CC $2.0K || Walmart CC $3.0K || CapOne QS1 $700 || CapOne QS $800 || Mission Lane $1.5K || Merrick $1.0K || AMEX Optima $500
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