Adding an installment loan -- the Share Secure technique

[CreditMagic7]

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@shakalaka wrote:

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@shakalaka wrote:

Thanks for the detailed guide. I bank with them since 2012, so I didn't have to apply for membership first. It took me 2.5 hours from appying for the loan to getting it finalized and funded. Now waiting for the loan hitting my report. Let's see if it gets me closer to the 800 

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So the first result is in. 8.8% of the original amount reporting and TU jumped 25 points. Waiting for EX and EQ to update

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Another proof positive which is a direct result courtesy FICO's own scoring rules per the mix category to a net gain. Nice effort.

[Anonymous]

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@Anonymous wrote:

Ok so my alliant loan finally reported under 9%. I have had quite a bit of movement upward in the last two weeks. First I had an experian bump from 723 to 735, my guess is I passed some kind of a revolving account age threshold because the "short revolving history" note disappeared from the "what is hurting your score" section.

Yesterday the alliant loan reported under 9%. Experian jumped from 735 to 763! 

The secured loan trick works great. Thank you creditguyindixie for writing up the guide! It is appreciated! 

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I checked TU and EQ today. TU moved up 30 points to 768, EQ moved up 29 points to 776.

[Anonymous]

Quick question for creditguyindixie. What is the minimum payment you reccomend each month?

[Anonymous]

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@Anonymous wrote:

Quick question for creditguyindixie. What is the minimum payment you reccomend each month?

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I don't know that there is any FICO scoring advantage to making any payments at all, once you get your installment utilization below 8.9%.  I personally have an autopay set up from an external bank account -- if I remember right I did something like $1.50 every other month.  But remember, the way Alliant works, you won't actually have to make any payments for 4 years or so -- you are paid ahead way in advance.

There is a possible inactivity/dormancy fee, which is why the guidance recommends making a payment to the loan account at least once every 11 months,  And if the savings account is not seeing any action, you can push a little into it for the same reason.

[Rebuilding69]

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@manyquestions wrote:

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@Grafton88 wrote:

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@Rebuilding69 wrote:

I was hoping to do this with NFCU as I bank with them & I've never had an installment loan before, and I'm planning on getting a car in 8 months or so. But, when I went to the NFCU website to check on their shared secure loan they have available, you have to either call or go to a branch to do it, so does that mean  shouldn't do this with NFCU? Don't want the CSR's asking questions on everything I'm doing(the paying it down to <9% part).

If it isn't a problem calling or going in to a local branch, I'm assuming everything else would be similar?

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I did both of mine through NFCU.  The first was when my file was thin.  I couldn't even generate a score.  They gave me one for $500 with a term of 6 months.  I paid it off and now have a second one.  This one was for $500 with a term of 12 months.

I made sure I didn't have auto-pay selected.  I have paid off more than 90% of the loan.  When that happened my scores jumped about 25 points.  My credit reports stated I had made substantial payments on my loan.  I now make $5 payments every month.

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Do you know if NFCU will do a $500 loan for more than 12 months? Is there a hard pull or soft pull?

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I think I'm going to stick with Alliant on this since everything is outlined for that bank, but NFCU does their Shared Pledge Loan(is what the person on the phone was calling it) up to 60 months. I wasn't able to get pull info or minimum loan amount, but I'm assuming it's 500 minimum. No idea on pulls but this is NFCU we're talking about here so I'd assume it's a HP lol. Their website just doesn't give really any info on these kinds of loans unfortunately, that I could find at least.

[Anonymous]

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@Rebuilding69 wrote:

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@manyquestions wrote:

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@Grafton88 wrote:

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@Rebuilding69 wrote:

I was hoping to do this with NFCU as I bank with them & I've never had an installment loan before, and I'm planning on getting a car in 8 months or so. But, when I went to the NFCU website to check on their shared secure loan they have available, you have to either call or go to a branch to do it, so does that mean  shouldn't do this with NFCU? Don't want the CSR's asking questions on everything I'm doing(the paying it down to <9% part).

If it isn't a problem calling or going in to a local branch, I'm assuming everything else would be similar?

___________________________________________________________________________________________

I did both of mine through NFCU.  The first was when my file was thin.  I couldn't even generate a score.  They gave me one for $500 with a term of 6 months.  I paid it off and now have a second one.  This one was for $500 with a term of 12 months.

I made sure I didn't have auto-pay selected.  I have paid off more than 90% of the loan.  When that happened my scores jumped about 25 points.  My credit reports stated I had made substantial payments on my loan.  I now make $5 payments every month.

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Do you know if NFCU will do a $500 loan for more than 12 months? Is there a hard pull or soft pull?

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I think I'm going to stick with Alliant on this since everything is outlined for that bank, but NFCU does their Shared Pledge Loan(is what the person on the phone was calling it) up to 60 months. I wasn't able to get pull info or minimum loan amount, but I'm assuming it's 500 minimum. No idea on pulls but this is NFCU we're talking about here so I'd assume it's a HP lol. Their website just doesn't give really any info on these kinds of loans unfortunately, that I could find at least.

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http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/NFCU-Share-Secured-Loans/td-p/1919371

Some info from the past. 

[Anonymous]

Just wanted to add that this technique worked as well for me. I got a 35 point bump on EQ and EX and 50 point on TU. The TU bump was as a result of about 10 inquiries falling off around the same time.

Also, i paid the loan down to $44 immediately, i did not want to wait another month. I was able to delete the scheduled transfer a few days before it could be initiated.

Thanks @ CreditGuyInDixie and everyone else for the tips. 

[Anonymous]

Delighted to hear your good news, Zumroff, and all the other good experiences people are having with this.

Regarding alternatives to Alliant, I'm always interested in hearing about them.  The key things to look for are:

(1)  Lender does not do a hard pull to join the credit union or apply for the loan.

(2)  Borrower can choose a loan term of 60 months.

(3)  The amount of the loan can be as small as $500.

(4)  Borrower can pay off almost all of the principal within the first few days of the loan, while still keeping the loan open for the full 60 months.

(5)  As the borrower pays off the principal, a corresponding amount of his "secured" deposit becomes unlocked and available for his use.

Alliant meets all 5 criteria.  Many lenders who offer similar SSL products meet 3 or 4 of the criteria, but not necessarily all 5.  I'm confident that some non-Alliant lenders do meet all 5, but I don't have a personal experience with them.

Note that someone here might find a significant improvement on Alliant in some area.  For example, someone might find a lender that meets all five criteria but permits loan terms as long as 10 years (the longest Alliant gives is 5 years)..

I don't view all five of those criteria as equally important.  If Alliant changed its policy so that the smallest loan they gave was $1000 (criterion #3) I wouldn't consider that a big deal, since you would still get most of that once you paid it down (criterion #5).  But minimum loan size is not completely trivial, since if you make it big enough (e.g. $10,000) too many of us would lack the necessary cash available to secure it.

If anyone can find a lender that meets all 5 criteria, and you know this for certain, let me know and I will mention that lender as a possible alternative in the initial post of this thread.

[Anonymous]

What is a Share Secure loan?
A Share Secure loan is a particular case of a secured loan, as opposed to an unsecured loan.  When you get a car loan, for example, that loan is secured by the car itself.  That's why the bank owns the title to the car, until you pay it off -- and it is why the bank can repossess your car.  A mortgage is another example of a secured loan. 
       With a share secure personal loan, you open a savings account with the bank or credit union and deposit the full amount that you plan to borrow.  Once you take out the SS loan, that amount is frozen in your savings account.  Typically, as you pay it off, more and more of those funds are unfrozen.
       Different lenders will use slightly different language for this same basic idea.  At Alliant, for example, you will hear it called their Savings Secured Long loan.  At some other lenders it might be called a Credit Builder loan.  At some credit unions it would be called a Share Secure Loan.  Don't worry about the exact phrase the lender uses.  Instead focus on whether the product works the way we are describing.  Choose a lender that lets you do all of what this technique entails.

I have a question, my CU offers both so i dont have to apply for Allient CU but i see this in my CU web, which one should i take ??

Share Secured Loan

You’ll get immediate loan approval with a low variable rate Share Secured Loan. This loan allows you to borrow against the amount you have in your savings account for just 3 % over the savings rate. Plus, you have up to 60 months to pay the loan back.

and this:

Credit Builder Loan

You know how important it is to have good credit. A Credit Builder Loan is your key to establishing or reestablishing your credit. Here’s how it works: we loans you money that is deposited into a certificate of deposit. You make regular payments that are reported to the credit-reporting agencies. Once the loan is paid off, you get the certificate of deposit and have a better credit score.

[Anonymous]

It's difficult to be sure, since you haven't told us the name of the CU, and therefore it is difficult to research the two options in any depth.

It does appear that the CBL product is secured by a CD, and thus you won't br able to access any of the money you deposit until the loan is fully paid off.

If you scroll back a few posts, you will see a 5-point description of how best to compare loan products.

I will say that you should be careful about getting involved with any lender that says "we loans you money."