Adding an installment loan -- the Share Secure technique

[Revelate]

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@Anonymous wrote:

If I remember correctly when I signed up with Alliant I indicated I was a member of LIfetime Fitness which I am.  That allowed me to sign up without having to donate $10.  They did not ask for any sort of verification that I was an actual member of LIfetime Fitness.

I am by no means an expert at all at FICO scoring but seeing the cost of the Alliant loan is so low and it seems like age of credit accounts does matter for your score, you may consider opening it up as soon as possible so that your account is as old as possible, but that may not matter that much (if it matters at all) but it is worth mentioning.  

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Actually you're spot on, with how the algorithm is time dependent, if you want or need an account don't wait, open it now.  At any point in the future it will be older than if you'd waited... and waiting is just wasting time you don't ever get back in this case.

Speaking of, I should go refinance my mortgage on monday

[Anonymous]

As soon as the funds show up I will apply. 

[Anonymous]

I have one question about this.  Should I do this if I plan to buy a new car in June so I'll have an installment loan on my reports?  As of now, I only have two CCs: a Nordstrom with a CL of $2500 and a Cap1 with a CL of $3500.  I've never had a car loan so I'm not sure if the share secure technique will help or hurt me.  TIA!

[Revelate]

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@jandemonium wrote:

I have one question about this.  Should I do this if I plan to buy a new car in June so I'll have an installment loan on my reports?  As of now, I only have two CCs: a Nordstrom with a CL of $2500 and a Cap1 with a CL of $3500.  I've never had a car loan so I'm not sure if the share secure technique will help or hurt me.  TIA!

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Assuming your lender pulls a FICO 8 model (likely) and you want the best score possible going into the loan process, yes.

Depends who you go with though, if you go with DCU for example based on your EQ score compared to your others, won't be needed.

[Anonymous]

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@jandemonium wrote:

I have one question about this.  Should I do this if I plan to buy a new car in June so I'll have an installment loan on my reports?  As of now, I only have two CCs: a Nordstrom with a CL of $2500 and a Cap1 with a CL of $3500.  I've never had a car loan so I'm not sure if the share secure technique will help or hurt me.  TIA!

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It depends on when exactly you plan to buy the car.  Suppose you buy it in very early June.  You will then need for all of the following things to happen prior to your lender pulling your score

Open a savings account. and fund it.

Wait for the the funds to appear in your account.  When they do, apply for the loan.

Receive a call from Alliant to finalize the loan.  Then pay it down to < 9%.

Alliant reports your account for the first time and with the small balance.

The bureau updates its database with the info.

Any of these might take a few business days each -- except for the time it takes for Alliant to report the account, which will definitely take more than a few days.  There's been varying reports on how long that takes.  A few people said two weeks.  Some said 5-6 weeks.

So do the math and add up the time needed for all that.  You'll see that if you apply for the car loan on June 1 then it is quite possible that the account will not be on your reports.

The plan I'd recomend is to read the guidance, make sure the approach is right for you, if it is then initiate the steps ASAP, but plan for the possibility that the loan could take a while to appear.  Join Credit Karma and use it to pull your reports once a week.  When the loan appears on both EQ and TU and shows mostly paid off, then apply for the car loan.  

Bear in mind that the new account will cause your AAoA to drop.  You should do the math there as well.  If the drop causes an integer change in the region of 1-3 years, then I wouldn't be comfortable promising you that ithe SS loan would help you.  (Example, if you go from 2.3 years to 1.5.)  It might, but it might not.

You don't mention what your CC utilization is.  If your CC utili is > 9%, you will get more benefit by paying one card to $0 and keeping the other card at a low amount, e.g. $20.

[Anonymous]

I'm planning on buying a Honda and I know they pull EQ.  It's got one measly inquiry from 2015.  I'm considering DCU or my job's credit union.  I've looked into them and they say I can apply for an auto loan through them without joining.  They pull EX.  Decisions decisions! 

[Anonymous]

Thanks for the quick response.  I didn't mention my util because I've been a bad credit mommy and it's a wee bit high.  I'm going to be a good credit mommy later this month and pay them down considerably to under 30%.  I think that will give me quite a boost.  I figured I'd pay the store card to $0 and leave 30% or less on the Cap1.  I'd love to add a third card to the mix but I haven't picked which one would best suit me.

[Absolution16]

I am rather glad that this thread has gotten the much deserved attention that it deserves.  Wish everyone else that started down this path the best of luck!

My update:

My account is set up so that every 7th of the month was the date that auto payment was scheduled initially.  As I have stated previously, I have deleted the auto payment arrangement after paying off the first $420 off the $500 loan for 5 years.  Since then I made an additional payment to reduce the current balance to just above $43, which makes the account utilization ratio slightly below 9%.

I have elected to replace the first auto payment arrangement with a monthly payment of $0.25 about 3 business days before every 7th of the month.  My current set up has it so that on Tuesday, the first $0.25 payment should go through.  Alliant lets you arrange future payments upto 24 months ahead.  This isn't an automatic option, but a "future" payment option, set on an exact date you specify.  Auto pay option only allows me to set up an auto payment for $2.43 on May 7, 2020 and beyond.  Instead of having to worry about checking back with the account every few months and losing track of it, I elected to just pay miniscule amount each month so that my balance doesn't go down so much until 2020 hits.

By sometime next week, I will find out whether or not the initial auto payment setup, which was deleted, still goes through, even if you have deleted it.  I think Alliant reports to the bureaus right around the 7th of each month, so in about a week, my credit reports should all report less than 9% utilization on this loan, which will effectively remove one negative factor of having too much balance on my exisiting installment loan.  It will also be interesting to see how much score increase I will see from doing this.

I am at a point where I am completely satisfied with my currently open accounts (5 newly opened credit cards and this one installment account), so I don't plan on opening any accounts for the next couple of years.  Hopefully by the end of the year, all of my accounts that I created this year, including this one, has aged nicely and it is my hope that they all become accounts being paid as agreed, which isn't the case right now.

I will post more update next week after Alliant reports this account to the bureaus.

Good luck everyone, and thanks again to Dixie, Revelate, Jamie, and other contributors.

[Anonymous]

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@jandemonium wrote:

Thanks for the quick response.  I didn't mention my util because I've been a bad credit mommy and it's a wee bit high.  I'm going to be a good credit mommy later this month and pay them down considerably to under 30%.  I think that will give me quite a boost.  I figured I'd pay the store card to $0 and leave 30% or less on the Cap1.  I'd love to add a third card to the mix but I haven't picked which one would best suit me.

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Your Cap1 has a CL of $3500 and the other card a CL of $2500.  When you say that you are planning to pay the Cap 1 to under 30%, do you mean you will pay it down to under $1050?  (30% of $3500?)  Or did you mean that you will pay it down to 30% of $6000?  ($1800?)

What are your current balances? 

Depending on what your balances are now, and on how far you plan to bring your CC debt down, you will likely get all the boost you need there rather than playing games with the installment loan.  Remember all your need is a small number of points.  Obviosuly I am a big fan of the SS loan technique in general, but your focus (given your extremely tight timeline, high CC debt, and small number of points needed) really needs to be on proven strategies that are far more powerful (e.g. lowering CC debt).

No matter what strategy you employ, you need a tool to monitor your reports and to wait until your chosen approach is reflect in the reports before applying for the loan.  Lowering CC debt can take a while to get reflected in reports too.  A good report-pulling tool for you would be Credit Karma.

[Anonymous]

@Anonymous wrote:

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@jandemonium wrote:

Thanks for the quick response.  I didn't mention my util because I've been a bad credit mommy and it's a wee bit high.  I'm going to be a good credit mommy later this month and pay them down considerably to under 30%.  I think that will give me quite a boost.  I figured I'd pay the store card to $0 and leave 30% or less on the Cap1.  I'd love to add a third card to the mix but I haven't picked which one would best suit me.

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Your Cap1 has a CL of $3500 and the other card a CL of $2500.  When you say that you are planning to pay the Cap 1 to under 30%, do you mean you will pay it down to under $1050?  (30% of $3500?)  Or did you mean that you will pay it down to 30% of $6000?  ($1800?)

What are your current balances? 

Depending on what your balances are now, and on how far you plan to bring your CC debt down, you will likely get all the boost you need there rather than playing games with the installment loan.  Remember all your need is a small number of points.  Obviosuly I am a big fan of the SS loan technique in general, but your focus (given your extremely tight timeline, high CC debt, and small number of points needed) really needs to be on proven strategies that are far more powerful (e.g. lowering CC debt).

No matter what strategy you employ, you need a tool to monitor your reports and to wait until your chosen approach is reflect in the reports before applying for the loan.  Lowering CC debt can take a while to get reflected in reports too.  A good report-pulling tool for you would be Credit Karma.

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I plan on paying down to 30% of $6000. I believe my util is 88%  I'll have to wait for my scores to reflect the payments anyway so if I have to wait past June, it won't hurt my feelings...much.  I've got myFICO (won't get a new report until July 7th, although I've seen my scores get updated, just not the auto ones, which is fine).  I've got Credit Karma Credit.com so I can see reports quicker.  Thanks again!