Adding an installment loan -- the Share Secure technique

[newhis]

I like to try things. I know this technique is to get the best score boost with little money.

I'm wondering if there is any score change when you open the loan and let it report 100%. 

Will the 'mix' will be enough to give some points?

I may open the loan, let it report 100% then pay it down.

[Anonymous]

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@newhis wrote:

I like to try things. I know this technique is to get the best score boost with little money.

I'm wondering if there is any score change when you open the loan and let it report 100%. 

Will the 'mix' will be enough to give some points?

I may open the loan, let it report 100% then pay it down.

---

Remind me.... do you have any installment loans of any kind, open or closed?  If you do not, then I would guess that the bare act of adding an installment loan would indeed give you some pure "credit mix" benefit.

If somebody REALLY wanted to test that, he'd need to be a person who had no installment loans, open or closed.  Then he would do the following:

(1)  Pull his three scores.

(2)  Add the loan and watch it report at 100%. 

(3)  Pull his three scores and note any changes.

(4)  Pay off the entire loan in his first payment.  Then wait for it to report as closed.

(5)  Pull his three scores and note any changes.

Compare specifically the scores in #1 vs. $5.  In #1 you have no installment loans, open of closed.  In #5 you have one closed installment loan.  If there is a net gain, that would seem to be the value that FICO 8 gives you for broadening your profile to include one closed loan.  #1 vs. #3 would be the net gain you get for broadening your profile to include an open loan (but with absolutely none of it paid off).

That is cool and interesting.  As far as the SS loan technique goes (i.e. a practical method) it's not of central importance.  Because in practice, if you are going to add a $500 SS loan, you shouldn't leave it at 100%.  There's no reason not to pay it down to 9%.

One of the cool things about the discovery of the SSL technique (and hey, I didn't discover it) is that it really means there is no reason any longer for any person not to have an open installment loan on his profile.  If you have one already, well then you have one.  And if you don't have one, then the technique gives you a painless way of adding a lot of points to your score.  Boom.  Even if a person is at 815 with no open installment loans (rare but can happen) why not go up to 845 by taking a couple hours to execute the technique? 

[Anonymous]

I just started looking into my credit after a 6 year hiatus. My reports are completely clean and have only a BMW auto loan from 2005-2010, which was Paid in full. On theTU report. I disputed a Capitol One inquiry from 2 years ago, and instead of just deleting it, they reported 2 years of perfect payments and reported the account closed and paid. No credit line or anything. In comments it says dispute resolved.  Have you ever heard of such a thing?   Because there is nothing on my report, I don't have a FICO score on Ex. and EQ. but my Tu is 739 Fico 8.  Thanks CapOne.  LOL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           I successfully managed to open a SSL from Alliant. This process was completely painless, but does require a bit of patience, approx. 11 days total to get account processed, loan approved, and ready to go. Everything was done by email, and they were very easy to deal with. I requested they change my due date to 11/25 from 12/1, so i could get it reported this month, and I had the loan documents within an hour with the changed due date.   I will pay it down as instructed and cancel auto pay etc.                                                                                                                                                                                                                                                                                                                                                                                                   

I also applied for and received a Chase Freedom Unlimited card, which will also report in December. When that card reports it will have a <10% util and zero balance. Since I don't have a score on my other 2 reports will they generate a score when these 2 accounts hit my report, or do I need to wait 6 months to get a FICO 8 score?

I want to apply for a few other premium cards. Should I wait until I have a score to apply? or will these 2 accounts reporting be enough to get approved for AMEX, Discover?

[Anonymous]

Welcome to the Forums, PinkFloyd!  My comments in blue below.

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@Anonymous wrote:

I just started looking into my credit after a 6 year hiatus. My reports are completely clean and have only a BMW auto loan from 2005-2010, which was Paid in full.

You use the word "are" here (present tense).  Does that mean you currently have a closed BMW auto loan on all three reports?  You say below that "there is nothing on my report" and that you have no FICO score from EQ and EX.  If you have a closed auto loan on all three reports, then you would have a FICO score from all three bureaus.

On theTU report. I disputed a Capitol One inquiry from 2 years ago, and instead of just deleting it, they reported 2 years of perfect payments and reported the account closed and paid. No credit line or anything. In comments it says dispute resolved.  Have you ever heard of such a thing?   Because there is nothing on my report, I don't have a FICO score on Ex. and EQ. but my Tu is 739 Fico 8.  Thanks CapOne.  LOL         

                                                                                                                                                                                                                                                                                  I successfully managed to open a SSL from Alliant. This process was completely painless, but does require a bit of patience, approx. 11 days total to get account processed, loan approved, and ready to go. Everything was done by email, and they were very easy to deal with. I requested they change my due date to 11/25 from 12/1, so i could get it reported this month, and I had the loan documents within an hour with the changed due date.   I will pay it down as instructed and cancel auto pay etc.                                                                                              

I also applied for and received a Chase Freedom Unlimited card, which will also report in December. When that card reports it will have a <10% util and zero balance.

Good news about the Chase Freedom.  Congrats.  As a slight tweak, I would keep your utilization reporting at under 8.99% but have a positive balance report each month (at least $5 but it can otherwise be small if you want).

Since I don't have a score on my other 2 reports will they generate a score when these 2 accounts hit my report, or do I need to wait 6 months to get a FICO 8 score?

You need an account that is at least six months old on a report before that bureau's data can generate a FICO score.

I want to apply for a few other premium cards. Should I wait until I have a score to apply?

Yes, I myself would wait until you have a FICO score from all three bureaus before you apply for more cards.

or will these 2 accounts reporting be enough to get approved for AMEX, Discover?

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[Anonymous]

Thank You for the response.

The BMW account is closed and listed on all 3 reports the same.  Paid in Full in 2010.   No other accounts listed anywhere except the CapOne on TU.

By nothing on my report I meant to say current revolving or installment credit.  Next month I will have 1 of each.  

I pulled my Fico 8 reports from CCT and the only score I have is 739 TU.  I assumed the others created no score because there's nothing current.

I will definitely make sure to be under 8.9% Util  and keep a $10 balance on the Chase card per your advice.

When my report updates for Dec, hopefully both accounts will be reporting, and I will post the results here.

Thanks again for your help.  

[Anonymous]

Let me backpedal a bit.  Now that I know your situation a bit better, I can give you better advice about when you should see a credit score.

To get a FICO score, you need to have on your report...

• At least one account opened for six months or more, and
• At least one account that has been reported to the credit bureau within the past six months

Your BMW account meets the first criterion, since it is several years old.  But it probably hasn't been reported to the bureaus since it was closed, which was also years ago.

Your credit card and SS loan will meet the second criterion, as soon as they report the first time.  Therefore I would guess that you'll have FICO scores in all three bureaus by mid-Dec.

[newhis]

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@Anonymous wrote:

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@newhis wrote:

I like to try things. I know this technique is to get the best score boost with little money.

I'm wondering if there is any score change when you open the loan and let it report 100%. 

Will the 'mix' will be enough to give some points?

I may open the loan, let it report 100% then pay it down.

---

Remind me.... do you have any installment loans of any kind, open or closed?  If you do not, then I would guess that the bare act of adding an installment loan would indeed give you some pure "credit mix" benefit.

If somebody REALLY wanted to test that, he'd need to be a person who had no installment loans, open or closed.  Then he would do the following:

(1)  Pull his three scores.

(2)  Add the loan and watch it report at 100%. 

(3)  Pull his three scores and note any changes.

(4)  Pay off the entire loan in his first payment.  Then wait for it to report as closed.

(5)  Pull his three scores and note any changes.

Compare specifically the scores in #1 vs. $5.  In #1 you have no installment loans, open of closed.  In #5 you have one closed installment loan.  If there is a net gain, that would seem to be the value that FICO 8 gives you for broadening your profile to include one closed loan.  #1 vs. #3 would be the net gain you get for broadening your profile to include an open loan (but with absolutely none of it paid off).

That is cool and interesting.  As far as the SS loan technique goes (i.e. a practical method) it's not of central importance.  Because in practice, if you are going to add a $500 SS loan, you shouldn't leave it at 100%.  There's no reason not to pay it down to 9%.

One of the cool things about the discovery of the SSL technique (and hey, I didn't discover it) is that it really means there is no reason any longer for any person not to have an open installment loan on his profile.  If you have one already, well then you have one.  And if you don't have one, then the technique gives you a painless way of adding a lot of points to your score.  Boom.  Even if a person is at 815 with no open installment loans (rare but can happen) why not go up to 845 by taking a couple hours to execute the technique? 

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You are right, no need to wait to pay it down. I can't pay to get my scores, they don't like my ITIN, always want SSN.

I do have a closed loan (local CU secured loan for 12 months only from late 2014 to 2015).

I'll pay it to 8.9%. Thank you

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@Anonymous wrote:

I successfully managed to open a SSL from Alliant. This process was completely painless, but does require a bit of patience, approx. 11 days total to get account processed, loan approved, and ready to go. Everything was done by email, and they were very easy to deal with. I requested they change my due date to 11/25 from 12/1, so i could get it reported this month, and I had the loan documents within an hour with the changed due date.   I will pay it down as instructed and cancel auto pay etc.

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 I think they will report even if the due date is in December, no?

[Anonymous]

Yes that's what I was hoping for.  If EQ and Ex scores are anywhere close to the 739 TU after the SSL and Chase card report, I should be able to get most of the cards I want.

If that happens, would it be beneficial,  to apply for all of the cards I want (4-5) at the same time?    Take the inquiry and AAoA hit all at once?

From there, I intend to just sit on them for awhile, using them marginally, keeping util < 8.9 and a small balance on 1 of them.

Eventually I will raise the Credit lines, and watch my score grow.  

Thanks again for your help.  

[Anonymous]

You ask:

"Would it be beneficial,  to apply for all of the cards I want (4-5) at the same time?    Take the inquiry and AAoA hit all at once?"

I myself haven't done an app spree before (i.e. 5 applications in one day)..  My CC applications tend to be driven by waiting until there is some huge bonus that is being offered.... and it almost never happens that 4-5 cards are all having an amazingly high bonus at the same time.

In your case it makes a lot of sense though.  You may want to ask some people on the CC forum for their opinion. 

My focus on this thread is the SSL technique.  I will say this: do make sure you understand the Chase 5/24 rule.  Once your spree is over you will be rejected by Chase for any more CC applications you make for the following 24 months.  So if there is a particular Chase card you want in the next few years, now is the time to get it.

[Adidas]

I'm seriously considering trying this technique but I have 2 questions.

First how well does this technique work for someone with no installment loans but who already has a relatively high credit score in the mid 700's or above? Is there less of a benefit if you aren't rebuilding and already have a highish score?

Second how much money do you end up losing with this technique? Depending on whether you are already part of a CU you might have to make a donation to a non-profit to join the CU. After that though how much money is lost in interest? I'm guessing by paying down 99% right away you could reduce this amount but I'm looking for a specific example from someone who has done the technique. My goal here is to be able to say "It will cost $5.50 in interest to get 37 points" and then I can decide whether that's a good deal for me.

Thanks for any info!