Should I use self lender

[Anonymous]

I started my rebuild/new build from scratch at the beginning of this year. I used a discover secured which just graduated. I got a capital one Platinum which I pcd to Quicksilver and just got approved for the Paypal cashback MasterCard. My Fico is now just over 700 but I have no installment loan ever. Should I get a self lender account to have on file and increase credit mix? Thank you for any help because I just am not sure.

[Remedios]

Self lender would work a little bit because it would add to credit mix, however most gains from loans happen when it's paid below 9%. 

Self lender is not a good option for long term score boost from installment loans in a way that SSL is.

I suggest you research SSL (share secured loans) and go from there. 

Personal finance section of the forum has some info on them

[Anonymous]

I've read about the ssl technique in the forums but understand the best options have gone away. ( Paying 90+% immediately and letting it report low for years). I guess what I really want to know is how important is it to have an installment on file. Again my situation is a good score but extremely short history. Ty for responding.

[Remedios]

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@Anonymous wrote:
I've read about the ssl technique in the forums but understand the best options have gone away. ( Paying 90+% immediately and letting it report low for years). I guess what I really want to know is how important is it to have an installment on file. Again my situation is a good score but extremely short history. Ty for responding.

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If you're not opposed to paying interest, it's a decent option. An active loan with timely payments wont hurt your credit (maybe a little at first because it may reduce AAoA and it will be fully utilized) but that will self correct in time. 

I dont have an active loan, and I wont get one just to play credit reindeer games, but that's personal philosophy. 

[Medic981]

As you can see, I have two self lenders in my signature line. If I had known about SSL I would have probably gone in that direction.

[Anonymous]

I understand the SSL technique is better but I'm not sure there is a good one now that Alliant doesn't do it anymore and I'm not a member of NFCU. Perhaps however I should rephrase my original question to: I've literally never had any installments loans, how important is it to have at least on on my report.

[Remedios]

Loan is not as important as utilization and payments but it aids in building well rounded profile. 

With cards, you have relative flexibility in how much you pay. You can pay minimum, over minimum payments or pay in full.

With loans, you show ability to maintain fixed payment. 

So, in that respect, as part of credit mix (handling various types of accounts) is important

If you're planning on buying a car in the near future, skip the loan for now. All you need is one

If you do not foresee any installment loans soon, it's up to you. 

[KJinNC]

Since you have credit cards but not other loans, the answer is yes, a Self Lender loan will trigger the "good credit mix" FICO reason, and will raise your score over time. It may not immediately raise it, since it will also affect AoYA, AAoA and the loan balance will be at or near 100%. But it will help over time. I would consider the two-year version so you don't need to potentially open a new account in a year if you don't have another loan by then.

How big the effect is and whether it's worth doing will vary too much for someone else to really say for sure, as it's profile-based and goal-based. For example, if you buy a car next month, the Self Lender loan will become pointless, because its advantages will duplicate the advantages of the car loan. Hope this helps, and good luck!

[Anonymous]

Thank you for your comments. I have no plans of applying for any other loans in the near future. I just don't want to apply for a mortgage 5 years from now with 800+ scores and get denials or bad rates due to never having had a loan before. That is really the only reason I'm considering it. It's not really to get a higher number as time and responsible cc payment will do that for me at this point already.

[Medic981]

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@Anonymous wrote:
I understand the SSL technique is better but I'm not sure there is a good one now that Alliant doesn't do it anymore and I'm not a member of NFCU. Perhaps however I should rephrase my original question to: I've literally never had any installments loans, how important is it to have at least on on my report.

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Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into Self Lender or a Share Secured Loan at a Credit Union.