Self-lender strategy!

[Anonymous]

Hello, i recently enrolled a self lender account with 525/24 months option. With Self lender you cant do 8.9% technique, so my question is: can i pay 1year off and after that pay the min amount the loan fullfilled...what you guys think?

[pamon]

Don't think they allow it. Have used them for a while and they just take monthly payments.

[Anonymous]

OP, here is a screenshot of a post from the CEO of Self-Lender (who happens to be an Established Member here).

[bass_playr]

My personal thoughts---and I currently have a SL account myself--

I opened this account to build credit history--payment history.  Paying off to get down to a low % of usage is not the issue if you need one of these accounts.  The benefit here is establishing positive payment history.  So, I personally think that, generally speaking, you're better off just making the payments on time and building the 12 or 24 months of positive payment history.  % of usage does not matter much if your whole payment history is either nonexistent or negative.  FICO says that 35% of your score--the single largest category--is payment history.  If you have on-time history, I believe that will be more important than usage, especially in the long run.  But then, that depends on why you got the SL account too.  If you're trying to show more credit at a low usage, then I see the point there.  But I would think that for most of us who use SL, it's about the need to build the positive history.  And you cannot do that by paying it off early.  

[Anonymous]

@bass_playr I understand what youre trying to say. My point is to get close to 8.9% technique as possible...and that is get 24 monyhs packet and pay off 12 months and leave the remainding 12 months...that way you might get a lil score boost off the bat?

[Anonymous]

Hi! 

In agreement with the screenshot email posted above paying off the account early could limit the benefit of the Credit Builder Account as it shortens the length of the loan and the number of payments that are reported. If you make a lump sum payment to pay 12 months at a time, it would result in reflecting as one month of payment history and the excess would be applied to principal. It would not prepay 12 months and the next month your monthly amount would still be due. Installment loans, like the Credit Builder Account, are not calculated like revolving lines of credit where you want to bring your balance down. 

[Medic981]

At this point, it sounds like you need three revolving CC accounts and one installment account. This in itself will give your FICO score a boost. Once you have a good credit history established, then, having an installment reporting < 8.9% remaining will be of benefit to you.

[Anonymous]

I actually have 5 revolving cc csr, amex green card, cap1 QS cap1 platium, discover it, the thing i dont have on my file is loan..

[bass_playr]

My suggestion would be to just do the loan, set it on autopay, and let it help your score without even thinking about it.  At this point, I believe letting it go the full term will benefit your score more than the usage % will, and while usage can change easier in the long term, having the full term of on time payments will give you more lasting benefits.

[Anonymous]

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@Anonymous wrote:
Hello, i recently enrolled a self lender account with 525/24 months option. With Self lender you cant do 8.9% technique, so my question is: can i pay 1year off and after that pay the min amount the loan fullfilled...what you guys think?

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I understand what you're asking. The short answer to your question is Yes.

As you now know, Self Lender has no pre-payment penalty. But what you can

do is pay in advance all but the last couple of payments, and then let time pass

until the last couple of payments are actually due.

For example, I'm on the $1,000/12 month plan. If I wanted to do what you're suggesting,

I could pre-pay all but the last 1-2 payments. Since you'll be paying principal and interest,

you'll be "buying time" so your next payment won't be due until 10-11 months from now.

Once that time has passed, then simply make the remaining payments on time.

Following this plan, you'll have an installment loan that reports 90% of the balance

being paid, your FICO scores will rise, and Oh by the way, you'll save money as well.

FYI, you can do this with any installment loan with no prepayment penalty.

But the key here isn't making early payments; the key is to make early payments

and let time pass so FICO gives you credit for on-time payments that result in a

higher FICO score. In addition, if you're afraid you might miss the final 1-2 payments,

no worries! Simply pre-set the Self Lender "autopay" function to the future date

when your final 1-2 payments will be due. So everything is on auto-pilot, your scores

rise, you save money, and you'll be a hero to yourself. Not a bad deal if you ask me.