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Should I get Navy SSL with closed delinquent student loans on file?

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Valued Member

Should I get Navy SSL with closed delinquent student loans on file?

My credit profile is thin. I have 1 open credit card and just opened Discover and NFCU accounts this month to up my total credit cards to three. These are my only open accounts. I've read a bunch of information regarding share secured loans and realize this is for people who do not show installment loans on their profile. I currently have closed delinquent student loan installment accounts on my report. These loans are updated monthly by US Department of Education but show as closed on my official credit reports. I will bring these loans out of default in 2020.

I primarily want a SSL for two reasons:

 

1) To beef up profile with an active installment account that will be in good standing for years to come. This would bring me to 3 active revolving accounts and one active installment

2) To help me build a great relationship with Navy so I can apply for a serious $10k-$15k limit card in next 6ish months after I do some other work with derogs. 

 

I plan to pay down the SSL 92% immediately after it is active. My average age of accounts is actually quite high around 9 years, they are just all closed lol. What do you think?


FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 1 of 19
18 REPLIES 18
Valued Contributor

Re: Should I get Navy SSL with closed delinquent student loans on file?

When you say bring them out of default, will the student loans show "open"?
Message 2 of 19
Valued Member

Re: Should I get Navy SSL with closed delinquent student loans on file?

@AllZero , Yes once they are rehabbed they will count as normal active open installment loans and will over shadow the SSL.  I just figure it'll make Navy Federal happier for me to have another account with them for when I go for a bigger card. Plus maybe it will help boost my profile a few points and help my discover graduate easier when that time comes since student loans will still be in bad shape in 7 months. 

 

Do I have anything to lose? I don't think Navy does a hardpull to set it up and I'd ultimately be tying up just a couple of hundred bucks once everything settles.  


FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 3 of 19
Valued Contributor

Re: Should I get Navy SSL with closed delinquent student loans on file?

Good thinking on the SSL front with Navy. It does yield positive results.

However, your student loans might negate it as you surmised, depending on the balance / loan utilization % vs the Navy SSL $. Minimum 5 year SSL is $3,001.

Outside of higher income and lower DTI, I don't have data points but I would guess to improve your own internal Navy score, perhaps look into their other products; certificates, CD, IRA, direct deposit, do monthly/weekly transfers of a few dollars into savings account.
Message 4 of 19
Valued Member

Re: Should I get Navy SSL with closed delinquent student loans on file?

@AllZero , I like your thinking regarding using their entire product line more for a well rounded approach. 

 

Regarding the student loans the million dollar question is do closed delinquent installment loans still count as installment loans for the purposes of fico scoring. I know people would see a boost if they had no installment accounts at all, but I really wonder if my closed installment accounts are hurting my "real" credit mix. I haven't been able to find an answer on that. I might just have to pull the trigger on it and test it for myself.


FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 5 of 19
Valued Contributor

Re: Should I get Navy SSL with closed delinquent student loans on file?

Excluding mortgage, an open installment loan optimized at <8.9% utilization will yield FICO bonus points 20-30.

Closed installment loans in good standing, paid satisfactorily will not give you that FICO score boost that an open account would. They will add to the AAoA, AoOA factors.

The delinquencies are definitely factored into scoring. You're being penalized for it.

I'm not familiar with student loans. Does your closed student loan show any utilization on your report?

Message 6 of 19
Valued Member

Re: Should I get Navy SSL with closed delinquent student loans on file?

@AllZero, The loans show balances and are updated every month but don't seem to be factoring into any utilization I see. All of the utilization metrics are simply based off my revolving accounts they are the only active accounts. The loans are closed and the status is collection, but they aren't separate collection accounts. The department of education adds new interest each month and updates it. 

 

The constant updating definitely weighs on my scores but I do agree with you that you need an open installment account to benefit from the installment account boost. I believe the SSL paid down to below 8.9% in the first month could serve as a good postive installment tradeline that could boost my scores since I currently have no positive installment open tradelines. Definitely think it is worth a shot. 

 

I'm fine to do the $3,001 but I might do less for a shorter duration if that's possible especially since in another year my student loans can serve as my positive installment account I don't really need the positive effects of the SSL after that. 


FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 7 of 19
Valued Contributor

Re: Should I get Navy SSL with closed delinquent student loans on file?

Someone with more expertise hopefully can answer the closed student loan balance utilization metric. I can only guess it's a negative impact.

Getting a short term SSL will be short lived and you'll lose any points you've gained once paid off and closed.

Navy offers short term SSL
6 months $250
12 months $500
Not sure sure on 2, 3, 4 year terms.

Things to consider:
Reset of AoYA
Lower AAoA

I recommend addressing any derogatories or delinquencies on your credit report. You'll see more FICO points gain from it.
Message 8 of 19
Valued Member

Re: Should I get Navy SSL with closed delinquent student loans on file?

Another solid point. Thank you. If I do go with SSL I'll be sure to do at least the 5 year just for the AAoA and AoYA aspect

FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 9 of 19
Valued Contributor

Re: Should I get Navy SSL with closed delinquent student loans on file?

You're welcome. Good luck.
Message 10 of 19
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