Adding an installment loan -- the Share Secure technique

[Anonymous]

CGID. I'm hoping the end of this week. I'll keep you guys posted with any updates!

[Anonymous]

I want to try this. 

What happens if i pay off the debt early? Like in 1-2 years? What will happen to my credit score? 

[Anonymous]

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@Anonymous wrote:

I want to try this. 

What happens if i pay off the debt early? Like in 1-2 years? What will happen to my credit score? 

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You lose most of the points you gained, possibly all.

[Aahz]

While I'm not personally participating in this experiment I've been following along and truly appreciate the FICO experimentation you guys are doing here!

I've been puzzling over the reported results regarding paying off auto loans with student loans reporting lately and have a theory that may help explain the apparent anomaly seen within the installment loan mix category of FICO scoring.

How, exactly, does the S/S loan report to the credit bureaus?  I'm confident the "Account Type" is Installment (the same as both Auto & Sudent Loans), but what about the "Loan Type" which differentiates between Auto & Student?  Does it report as Secured, Personal, or simply Installment?

Because if it reports "Secured" this could help explain the apparent anomalies.  We know that FICO considers people with at least one Secured loan (typically auto or mortgage) to be at lower risk of default.  So if the S/S reports as such that would explain the difference between the S/S and Student Loans.

I think the needed experiment would require someone opening a non-secured personal loan and then folowing all of the steps in the S/S method though I am unaware where one would acquire a non-secured loan that would allow pushing the payment date into the future.

Thoughts?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I want to try this. 

What happens if i pay off the debt early? Like in 1-2 years? What will happen to my credit score? 

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You lose most of the points you gained, possibly all.

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So what's the point? After 5 years, you will all lose the points. What?!?! 

[Anonymous]

Well, you don't have to lose all the points at five years.  If you still have no other installment loans at month 59, you could take out another Alliant SS loan, pay it down, etc.

The SSLT is really designed for people who have no installment loans and who want an extra 30 points during the period that they otherwise would not have any.  It's especially good for a person who is preparing for his first big loan -- like a car loan.  The extra 30 points could be a big help in securing him the loan or getting him the best interest rate.  Likewise it could help him get his first couple good credit cards,

Equivalently, the SSLT is good for someone who has a loan now but will be be making his last payment in the next couple months.  Here the technique prevents the person from losing 30 points when he would have paid off all his loans.

I suggest you read the second post in this thread: "The Theory Behind The Technique."  It explains how FICO 8 scores installment debt.  You will be less puzzled and less inclined to ask the questions you are asking now if you read that first.

[manyquestions]

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@Aahz wrote:

I think the needed experiment would require someone opening a non-secured personal loan and then folowing all of the steps in the S/S method though I am unaware where one would acquire a non-secured loan that would allow pushing the payment date into the future.

Thoughts?

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I don't recall if it was in this thread or the original big thread on this topic, but I think I remember a poster reporting that they were able to do this same thing with an unsecured loan they had with USAA.  They noticed dates behaved the same way when paying down at a greater rate than scheduled..  I could be wrong.

[joltdude]

Interesting...

Still waiting for the first payment... No red warning... just this appears when you go to look at the autopay section..

Not in red... just bold text..  Just on the wait and see for it to change after the autopayment goes through. 

I expected a big red warning not this...

Hope its just a formatting change....

Setup Automatic Payment

Your loan is currently set up for automatic payment. If you wish to change or cancel the automatic payment, please call us at 800-328-1935 for assistance (Hours: Mon-Fri 7am-7pm CST).

[Anonymous]

I just got an alert from Creditwise. Looks like Alliant reported to Transunion today! I keep everyone posted on the other bureaus. I open this account late Feb. around the 25-26. Paid down to $44.asap. It's showing $44 dollar balance. I canceled the auto pay on the 27th. It did not pull from my account.

[Anonymous]

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@Anonymous wrote:
I just got an alert from Creditwise. Looks like Alliant reported to Transunion today! I keep everyone posted on the other bureaus. I open this account late Feb. around the 25-26. Paid down to $44.asap. It's showing $44 dollar balance. I canceled the auto pay on the 27th. It did not pull from my account.

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Hello NDH!  Thanks for the heads up.  Poppa will be glad to hear this.

Just for clarity, it is almost certainly not the case that Alliant reported to TU today.  The steps that occur are these:

(1)  The creditor reports the updated record to the CRA

(2)  The CRA updates its own internal database

(3)  The updated record manifests itself as an "Alert" on your credit monitoring system (CMS)

For Alliant, #1 always occurs on the last day of the month -- I think sometime in the evening.

#2 and #3 each can take some number of business days. 

It's useful to see that this whole process took 8 calendar days this time.  If Alliant had reported on a Friday and then we had had a Monday federal holiday, it could have been 12 calendar days.