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Self Lender?

Regular Contributor

Re: Self Lender?


@rbentley

I think I will replace it with a long term SSL from a CU like Navy that will allow me to prepay it down to 8.9% while keeping the longer term.  That seems like a better option for long term score increase.

The CU SSL's, NFCU in particular work for a nice little score boost.  Mine rose 30 points +/- after reporting paid down to 8%.  That 92% that was paid down came right back to me as well.  There is no downside to this and I am also building history with the CU.

Message 21 of 32
Established Member

Re: Self Lender?

@spiritcraft1   The CU SSL's, NFCU in particular work for a nice little score boost.  Mine rose 30 points +/- after reporting paid down to 8%.  That 92% that was paid down came right back to me as well.  There is no downside to this and I am also building history with the CU.  

Can you elaborate here? I was interested in the Self Lender until someone advised me that I can do the same with a FCU so I joined NFCU and I'm looking at doing this next month. Does that mean pay the balance down to 8% immediately or once it hits 8% you get a nice boost?

Message 22 of 32
Regular Contributor

Re: Self Lender?


@JujuBeez wrote:
Will your credit score drop once the SL is paid in full and the account closes?

The short answer is, "it depends".

 

What is your AAoA?  What mix of different tyoes of credit do you have?  Also, any collections or charge-offs?  Credit scores are not determined by one factor, but several.  As explained to me, payment history is the single largest factor, accounting for 35% of your score.  So, payment history weighs in big.  Also, your utilization drops as you pay it down.  Once paid off, your utilization drops, which can help your score--unless you have a lot of credit maxed out at that time.  

 

I personally know of one person who got a SL account, and as soon as it was paid off, he got another one.  His score jumped significantly in the process.  But it all depends on the rest of your credit report as well.  I won't pay my SL off early, so I'll be done with it next February.  I've already seen a pretty good jump from it.  When February comes, I'll see what the whole situation is and might do another one.  

Message 23 of 32
New Visitor

Re: Self Lender?

I was about to pull the trigger on this actually!!! should I go for it?

Message 24 of 32
Valued Member

Re: Self Lender?

Can you pay Self Lender down in advance?   Perhaps get the 24 month option, and pay down in 12 months?  I would like to get below 8.9% utilization as quickly as possible without closing the loan prematurely





Message 25 of 32
Regular Contributor

Re: Self Lender?

Please read threads here about this.  Self Lender does not work well when paid down early, that's not the purpose for it.  

 

Think of it this way--credit building is not a short sprint.  Don't think short term over long term.  SL accounts are designed to show positive payment history over time.  Let me put it to you this way--one of my FICO scores has gone up by 50 points because I have a self lender account, another one of my FICOs went up 44 points.  I started the account in March.  So, in 6 months with no other changes, those are my results so far.  If you pay it down quickly, you lose that benefit.  Potential creditors don't want to look at your report and see that you can pay a lump sum....they want to look at your report and see positive monthly payment history, on time.  

 

If you already have positive installment credit on your report, like a car loan, then SL won't really help much.  It depends on your specific circumstances and what you are trying to accomplish.  Every credit product is designed to do specific things.  That's why your mileage may vary.

Message 26 of 32
Regular Contributor

Re: Self Lender?


@ngof15 wrote:
@spiritcraft1   The CU SSL's, NFCU in particular work for a nice little score boost.  Mine rose 30 points +/- after reporting paid down to 8%.  That 92% that was paid down came right back to me as well.  There is no downside to this and I am also building history with the CU.  

Can you elaborate here? I was interested in the Self Lender until someone advised me that I can do the same with a FCU so I joined NFCU and I'm looking at doing this next month. Does that mean pay the balance down to 8% immediately or once it hits 8% you get a nice boost?


Yes, absolutely.  I just did this last month.  I opened an SSL at Navy.  The process took maybe 15 minutes.  No hard pull, it is an automatic approval as far as I understood.   The loan showed up in perhap a half hour and the proceeds were deposited into my checking account  (they ask where to deposit them) .  I then paid the loan down to 8% within a couple hours of starting the process.  About 5 days later, the 92% was returned to me in my savings account (released).  The loan reported on the 1st of October and my scores rose between 27 and 35 points (real Fico 8's).  I did a longer term loan, 48 months, $3501.00 and next payment is due in 2023.  I did set up auto pay to pay $4 per month until then to show activity but heard that that was not required to have them report each month.  You can do this deal with less but you may then have to do another one every 12-24 months depending.  You can ask NFCU how much is needed for whatever term.  You need $3501 to go 48 months for instance.  But...  they are only holding $280.00 as we speak since the balance was paid off and was then returned after.

 

Please do not call and ask about paying off early etc...  we do not want this to go away like it did at Alliant.  It is great for relationship building with NFCU!

Message 27 of 32
Contributor

Re: Self Lender?

No self lender isn't meant to be paid down huge up front like others. Mine is halfway through and will be done in March 2019. 48/month and reports to 3 bureaus.
Fico 8 Exp 598 Transunion 598 Equifax 596 (7/18/18)
FICO 8 Exp 609 TransUnion 622 Equifax 617 (8/10/18)
FICO 8 Exp 643 Equifax 641 Transunion 655 (9-10-18)
9/29/18 FICO 8 exp 630 Transunion 646 Equifax 627
Message 28 of 32
Regular Contributor

Re: Self Lender?

Wait, I'm confused....NFCU gives you an actual loan and not just a self-lender type?  Please explain on this one.  I was under the impression that NFCU's program was like SL's, where they don't actually lend you any money, you just make payments and at the end the money is yours.  

Message 29 of 32
New Contributor

Re: Self Lender?

The  share saving secure loan at Credit Unions works like this:

 

If you have $1k in your account.  You will need to use that as security deposit for your loan.  Once you are approved with the loan.  The $1K (or whatever the amount you decided to get on the loan) will be deducted from your Share Saving account.  You will then get a deposit from your CU (the loan) to your account.  Then you can use that same money to pay off the majority of the loan in advance, leaving 1 or 2 payments balance on the loan so it remains an active installment loan.

 

So let say you took out the 24 months loan and paid off in advance 22 months.  You can pretty much ignore the payments for the next 22 months while watching it reporting positive monthly payments and low utilization on the loan and hopefully your overall credit profile.


Starting Score: 580
Current Score: 580
Goal Score: 750


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Message 30 of 32