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What to expect with Self Lender - Real Life example

MrMoneyMustache
New Member

What to expect with Self Lender - Real Life example

Disclaimer for Moderators:

  • I don't share any personal information in this post. Any personal data from the linked images is blacked out.
  • It's not spam and I don't promote any service in my post.
  • This post is a real-life example, which should serve to myFico forums readers to make informed decisions about the finances.

 

Facts:

  • took a loan from Self Lender on October 20th, 2018.
  • It was $1,800 for 12 months, with payments of $150 each month, the principal of $1,700, and 12.03% yearly rate.
  • There was no hard inquiry on my credit report from Self Lender.
  • My credit score had been consistently going up from 12 months prior to the loan from Self Lender.
  • Between October 16th and October 30th of 2018 my score has dropped 14 points.
  • I paid it off within less than 4 months on January 12th, 2019.
  • It will take 12 days until Self Lender will deposit my money, and 14-16 days until I'll have them in my bank account.

 

Considerations:

  • My credit score had been consistently going up at the same rate prior to the loan from Self Lender.
  • I haven't used any of my credit cards 12 months prior to and after the loan from Self Lender.
  • I've carried $0 balance every month on all my credit cards from 12 months prior to and after the loan from Self Lender.
  • All my car payments started 12 months prior to the loan from Self Lender and they were always on time prior to and after the loan from Self Lender.
  • There were no new hard inquiries on my credit report from 12 months prior to and after the loan from Self Lender.
  • I've had no other loans or financial obligations other than my car loan prior to the loan from Self Lender.

 

Assumptions:

  • I'd estimate the actual negative impact on my credit score due to taking the loan with Self Lender was 16-20 points down.
  • Self Lender could help to boost my credit score but only a little. I'd estimate it between 1-2 credit score points up each month, after the initial score drop.
  • Paying off my car loan with $160 monthly payments ($4,600 left prior to the loan from Self Lender) was far more helpful when looking at the same period as the loan from Self Lender.
  • The estimate is accurate since I have been monitoring my score.

 

Conclusions:

  • Overall, the loan from Self Lender cost me a little over $60 and having the lower credit score, than before the loan, or in other words,
  • I paid over $60 to actually get my score down.
  • If I'd continue doing monthly payments until the maturity period (9/20/2019):
    • I'd gain between 8-16 points maximum on my credit report, attributed to Self Lender alone.
    • The loan would cost me ≈$100.

If a loan with 12.03% yearly rate is enough for you for freezing your own money, then go for it... It was a failed experiment for me and I conclude these types of loans are not worth it. There are better ways to build or fix your credit score.

 

The contract, conveniently for Self Lender, doesn't specify how long it will take to deposit the money back to my bank account.

 

Here are some screenshots:

Now, I know that Self Lender covers themselves with the statement from the prepayment disclosure, saying"Rather, early payments will reduce the principal balance due and may result in my making fewer payments."

 

Conveniently for themselves, Self Lender doesn't distinguish payments and paying in full as separate entities in the contract.

 

I'm writing this so any other person would be aware of this, before making the decision. If I'd pay on the 19th (I paid it off on the 12th), it would take them 5 days, not 12, to deposit my own money. If I'd pay off on 21st of the previous month, it would take them 35 days to deposit my own money...

 

I think it's an unfair practice, especially due to the fact that prepayment and paid in full are not the same thing.

 

The contract doesn't define, conveniently for Self Lender, what paid in full means.

 

Yes, I know they state in the contract, conveniently for Self Lender, that "You may not make withdrawals from your account until the maturity date." The maturity date is the end of the contract.

However, all the information about that and early withdrawal in the section Certificate of Deposit Truth in Savings, is about the savings, rates, and interest, NOT about the withdrawal when paid in full.

 

I understand that the law is on Self Lender's side, because of how this contract is stated. I also understand that they vaguely have this information in their help section. I hope you too understand this, before paying for lowering your credit score and freezing your own money for a year or more.

 

Self Lender information about the early payoff from their help section:

 

TL/DR: Instead of using self-lending services, like Self Lender, get your poop together and use that money to pay off your credit cards. Stop spending, start watching/listening/reading Dave Ramsey, start reading this forum, start saving, focus on your life and don't use schemes and shortcuts, get debt free, be happy.

8 REPLIES 8
Brian_Earl_Spilner
Community Leader
Mega Contributor

Re: What to expect with Self Lender - Real Life example

You took a hit to your credit because you already had an installment loan(auto). If you had no installment loans prior to the selflender, you would have received a boost by optimizing your credit mix.







Message 2 of 9
FiresOut
Super Contributor

Re: What to expect with Self Lender - Real Life example


@MrMoneyMustache wrote:

Disclaimer for Moderators:

  • I don't share any personal information in this post. Any personal data from the linked images is blacked out.
  • It's not spam and I don't promote any service in my post.
  • This post is a real-life example, which should serve to myFico forums readers to make informed decisions about the finances.

 

Facts:

  • took a loan from Self Lender on October 20th, 2018.
  • It was $1,800 for 12 months, with payments of $150 each month, the principal of $1,700, and 12.03% yearly rate.
  • There was no hard inquiry on my credit report from Self Lender.
  • My credit score had been consistently going up from 12 months prior to the loan from Self Lender.
  • Between October 16th and October 30th of 2018 my score has dropped 14 points.
  • I paid it off within less than 4 months on January 12th, 2019.
  • It will take 12 days until Self Lender will deposit my money, and 14-16 days until I'll have them in my bank account.

 

Considerations:

  • My credit score had been consistently going up at the same rate prior to the loan from Self Lender.
  • I haven't used any of my credit cards 12 months prior to and after the loan from Self Lender. Your losing points. Never have all accounts report zero. Upwards of 20 points missing out on.Better use some to charge anything and pay it off. Banks will close them for inactivity.
  • I've carried $0 balance every month on all my credit cards from 12 months prior to and after the loan from Self Lender.
  • All my car payments started 12 months prior to the loan from Self Lender and they were always on time prior to and after the loan from Self Lender.
  • There were no new hard inquiries on my credit report from 12 months prior to and after the loan from Self Lender.
  • I've had no other loans or financial obligations other than my car loan prior to the loan from Self Lender.

 

Assumptions:

  • I'd estimate the actual negative impact on my credit score due to taking the loan with Self Lender was 16-20 points down.
  • Self Lender could help to boost my credit score but only a little. I'd estimate it between 1-2 credit score points up each month, after the initial score drop.
  • Paying off my car loan with $160 monthly payments ($4,600 left prior to the loan from Self Lender) was far more helpful when looking at the same period as the loan from Self Lender. Paying off any loan takes points away.
  • The estimate is accurate since I have been monitoring my score.

 

Conclusions:

  • Overall, the loan from Self Lender cost me a little over $60 and having the lower credit score, than before the loan, or in other words,
  • I paid over $60 to actually get my score down.
  • If I'd continue doing monthly payments until the maturity period (9/20/2019):
    • I'd gain between 8-16 points maximum on my credit report, attributed to Self Lender alone.
    • The loan would cost me ≈$100.

If a loan with 12.03% yearly rate is enough for you for freezing your own money, then go for it... It was a failed experiment for me and I conclude these types of loans are not worth it. There are better ways to build or fix your credit score.

 

The contract, conveniently for Self Lender, doesn't specify how long it will take to deposit the money back to my bank account.

 

Here are some screenshots:

Now, I know that Self Lender covers themselves with the statement from the prepayment disclosure, saying"Rather, early payments will reduce the principal balance due and may result in my making fewer payments."

 

Conveniently for themselves, Self Lender doesn't distinguish payments and paying in full as separate entities in the contract.

 

I'm writing this so any other person would be aware of this, before making the decision. If I'd pay on the 19th (I paid it off on the 12th), it would take them 5 days, not 12, to deposit my own money. If I'd pay off on 21st of the previous month, it would take them 35 days to deposit my own money...

 

I think it's an unfair practice, especially due to the fact that prepayment and paid in full are not the same thing.

 

The contract doesn't define, conveniently for Self Lender, what paid in full means.

 

Yes, I know they state in the contract, conveniently for Self Lender, that "You may not make withdrawals from your account until the maturity date." The maturity date is the end of the contract.

However, all the information about that and early withdrawal in the section Certificate of Deposit Truth in Savings, is about the savings, rates, and interest, NOT about the withdrawal when paid in full.

 

I understand that the law is on Self Lender's side, because of how this contract is stated. I also understand that they vaguely have this information in their help section. I hope you too understand this, before paying for lowering your credit score and freezing your own money for a year or more.

 

Self Lender information about the early payoff from their help section:

 

TL/DR: Instead of using self-lending services, like Self Lender, get your poop together and use that money to pay off your credit cards. Stop spending, start watching/listening/reading Dave Ramsey, start reading this forum, start saving, focus on your life and don't use schemes and shortcuts, get debt free, be happy.


You had 1 installment loan which was your auto. When it was paid off. You lost a few points. When you paid off Self Lender your only installment. This was the biggest loss. No installments on report and then add no cards reporting a balance. More points less. Take 1 card and let it report <8.99% and see what happens. Score will go up much higher than you think. So in a way its not SL fault. It was the way you went about it. Now you know. Report back after doing a AZEO month. Good Luck!

Message 3 of 9
ScoreJunkie
Frequent Contributor

Re: What to expect with Self Lender - Real Life example

FireMedic is correct on all.
I have personal experience with ALL cards reporting a zero balance dinging you.



Message 4 of 9
800FICOGoal
Established Contributor

Re: What to expect with Self Lender - Real Life example

Definitely some wrong assumptions made by the OP. My experience with SL(9 mos)  has exceeded my expectations. 











Current

Goal Cards

Message 5 of 9
CivalV
Established Contributor

Re: What to expect with Self Lender - Real Life example

My score dropped about 20 points when Self Lender reported about 7 months ago. At that time I was also approved for

- Discover Unsecured $300 CL
- First Premier $700 CL
- VS CC $150 limit

In December of 2018 I was approved for

- HSN $750
-Target CC $300

For this month my Discover Secured card unsecured from $300 CL to $2000 unsecured limit.

Having 12 active accounts, 1 closed $350 $0 balance VS CC due to inactivity has helped my overall profile. I have 1 late still reporting but that will have no more impact in about 2 months. My AAOA at the end of this month with the new accounts will be roughly 1YR 6MOS. Overall AAOA is roughly 7 years.

In regards to Self Lender I started my loan June 20th. Paying $150 a month. I have $700 left to pay. By the time I finish this Self Lender loan I will officially have installment experience. This will be one less negative on my report. My progress has been absolutely amazing. Although my scores are still low that is due to high UTL. If I were able to pay off $4000 in CC debt my scores would be in the high 600s.

Everyone’s experience is different. I debated on paying the loan early but I felt in order to reap the benefits I might as well do the 12 months. Come June 20th I can use the money I put in to pay off more CC debt. No vacations here haha
Sept 18: EQ: 578 TU: 583 EX: 576
Sept 19: EQ8: 640 TU8: 645 EX8:640 April 20': EQ8: ??? TU8: 680 EX8: 673
Goal by Sept 20’ EQ: 700 TU: 700 EX:700

AA:


Goal: Auto Lease 2020 Jeep MOAB
Goal: Chase Sapphire Preferred
Goals Achieved Nov 19’: First Chase CC, Marriott Bonvoy w/ lowest APR rate of 17% April 20': First Citi CC W/ 15% APR rate Total CL:$21,400
Message 6 of 9
bass_playr
Frequent Contributor

Re: What to expect with Self Lender - Real Life example

With all due respect, I could not disagree more. 

 

Disclosure--I am not in any way affiliated with Self Lender, aside from being a current customer of theirs.

 

1--Self Lender is not a one size fits all deal.  Some people will benefit greatly from a SL account....others will not.  You already had installment loan credit on your report, so I don't exactly know why you would even do this to start with.  SL is designed to give you installment loan credit when you don't have positive installment credit on your report already.  having a car loan that you pay on time every month means you don't really need a product like SL in the first place.

 

2--you paid the whole balance off in 4 months.  Potential creditors don't want to look at your report and see that you can pay a lump sum quickly.  They want to see that you can make monthly payments as you agree to.  By doing this, you short-circuited the whole process.  

 

3--I've said this before in here....before using any credit product you must assess what exactly that product is intended for, and assess whether or not it will fill a need in your credit file.  If you had done this prior to getting a SL account, you would have seen that you are not going to benefit much or at all from getting it.  

 

I have documented my own experiences with SL recently as well.  Here is that thread:

 

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/2018-progress-Also-for-those-who-wonder-if-S...

 

Slow and steady is how you rebuild.  It's a marathon race, not a sprint.  Paying the whole balance off in 4 months might net you a small gain, but slow and steady has increased my credit score pretty much every single month as the SL balance gets paid down.  

 

Don't recall if I have listed it in the thread I linked, but since I got SL, and this score shot up, I also now have a $1K CL with Guitar Center and $1800 CL on a brand new Discover card.  I have decided that I'm stopping right here, no more new accounts....until after SL is done, which is 2 months from now.  At that time, I think I will look to get one more card, which will be a weekly use card.  I'll fill the gas tank, etc, and it will get paid off each month depending on when that creditor reports to the bureaus.  I want to show just a little usage each month.  That will be my AZEO.  Within the next 1-2 years I anticipate a new vehicle purchase and I'd also like to start building our house too.  It's worth noting that I even got turned down for a SECURED card before I started the SL account.  I didn't even know you could get turned down for one of those!

 

Remember, slow and steady.  

Message 7 of 9
James_at_Self_Financial
Valued Member

Re: What to expect with Self Lender - Real Life example

First, I'd like to say thank you to everyone who has used Self Lender. I want to clarify a few things here.

 

Individual results do vary. The credit-builder account is intended to help with payment history and building savings. Paying ahead on the loan will reduce your total amount owed, but also reduces the amount of payment history you are building by shortening the length of the loan. The expected monthly payment amount remains the same even if a prepayment is made.

 

This isn't an exhaustive list, but the product can be effective for people who meet one or more of the following:

  • don't have an existing installment loan
  • have no credit history or a thin file
  • aren't looking for a shortcut to improve their credit score
  • need help sticking to a plan to build their savings

Regarding payments, we'd like to clarify that there are monthly payments you make on the loan and there is a payout you get when the account is closed. If the loan is repaid in full early the customer selects whether to leave the CD open until maturity or to close the account and receive the payout.

 

Regardless of whether the account is closed early or the term of the CD is completed, funds typically arrive 10-14 business days to the payout method you selected (ACH - bank account or by check). 

 

One other point is that we use Experian's VantageScore 3.0 for credit score monitoring so it's possible the other bureaus may be showing something different as far as credit score impact.

CEO and co-founder @ Self Financial
Message 8 of 9
Atmos_7
New Contributor

Re: What to expect with Self Lender - Real Life example

 My credit score has personally gone up by 71 points since I signed up for a Self Lender account. YMMV of course, and there are customers who have posted extremely negative reviews towards SL (BBB, etc) but I have not seen anything out of the ordinary myself. Whether I continue using SL in the future or not will depend on other factors, but for this account - I'm pretty pleased with the service advertised.

Message 9 of 9
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