Adding an installment loan -- the Share Secure technique

[Anonymous]

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@Anonymous wrote:

I expect to get an auto Loan in the next 6 months for $15-20K AND I HAVE A LITTLE OVER $10K put aside for a business expense due in a couple months. Would it make sense to get a $10k SSL so it could mitigate the UTI to 30-50% when I get the auto loan?

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People have kicked around that idea for a long time on this thread.  In theory it is quite possible to use SSLs to lower one's installment utilization on a big "real" loan.  For example, in theory, one could take out 30 loans of 10k each, one new loan every two weeks, paying the loan down to $50 each time and unlocking the funds to prepare for another loan.  Eventually you'd be able to take a "real" auto loan for 29k and have the installment util at < 9%.  In theory.

But in practice it takes a lot of loans to do that.  That's a lot of work, and a long time, and for most people a substantial hit to their AAoA.  Most importantly you risk drawing the attention of the lender by these games you are playing.  Just doing the SSL technique once harms the lender slightly (due to the overhead assicated with that loan).  Doing it over and over and over again would likely get you noticed by the loan officers and would multiply the expense incurred by the lender many fold.

I see no particular reason not to do this once for a 10k amount, if you want, though we have not tested Alliant's willingness to do SSL's of that size.  It probably doesn't make them scrutinize stuff any more than they would for a $500 loan, but that's just a guess.

Can you tell us what your reports look like now?  I think you said that you have a very thin file.

[Anonymous]

From Alliant's standpoint, I'm guessing it's a matter of "the bigger, the better." A $100,000 SSL that's immediately paid down to 90% would still mean Alliant has $10,000 locked up for a while.

That said, is installment utilization really that big of a deal from a FICO standpoint? There's a big difference between a person's credit cards being maxed out and a person having a new car loan that's just being paid down.

[Anonymous]

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@Anonymous wrote:

My $44 balance hit EQ and TU today.

Original scores, pre-SSL, at 6 months of credit history:

TU: 724

EX: 719

EQ: 718

$80 balance scores (a BoA CLI HP on TU hit during this time, went down some):

TU: 723

EX: 714 

EQ: 732

$44 balance scores (EX hasn't hit yet, also took a TU HP for NFCU membership):

TU: 744

EX: 714

EQ: 771 (!)

A 53 point boost to EQ is beyond my wildest expectations.  My TU would probably be 10~ points higher without the 2 HPs.  I'm anxious to see how Experian reacts.

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Update:

It also hit Experian today to bring my final scores to -

TU: 744

EX: 746

EQ: 771

I'm not sure why my Equifax went up so much more than the other two, but they obviously like account mix.

[Anonymous]

Wow that EX jump, too!  Massive gains.  What else is holding you back from 800s now??  Low AAoA for sure, how's utilization?

Seems this trick solidies across the FICO scores for sure.  I'm still in subprime (low 600s to mid 600s from the SSL) and you're in near-prime (low 700s to mid 700s).  Wonder who it doesn't work for.

The best part is, it works for 4-5 years with almost no cost.  The interest on $44 is next to nothing, I spent more leaving a lightbulb on at home by mistake.

[Anonymous]

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@Anonymous wrote:

Wow that EX jump, too!  Massive gains.  What else is holding you back from 800s now??  Low AAoA for sure, how's utilization?

Seems this trick solidies across the FICO scores for sure.  I'm still in subprime (low 600s to mid 600s from the SSL) and you're in near-prime (low 700s to mid 700s).  Wonder who it doesn't work for.

The best part is, it works for 4-5 years with almost no cost.  The interest on $44 is next to nothing, I spent more leaving a lightbulb on at home by mistake.

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My oldest account is 7 or 8 months old.  I pay off to 1% every statement period.

I'm just starting out, really.  I'm probably going to grab a Chase card with my new EX/EQ scores and maybe a NFCU card and garden for a year after this.  I might be 800 at that point, we'll see.  I'm pretty happy to be where I'm at now.  Once my income is better (post degree) I look forward to being able to get some heavy hitters like a CSR.

It is a remarkable strategy and I'm very grateful to everyone here who has tested it and laid it out before us all to use it ourselves.

[Anonymous]

1 4 yo collection

1 Discover CC $2500. 1% uti.

2 30 yo inactive accounts still reporting.

Is that thin enough??

I'm ready to go to work.

[Anonymous]

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@Anonymous wrote:

From Alliant's standpoint, I'm guessing it's a matter of "the bigger, the better." A $100,000 SSL that's immediately paid down to 90% would still mean Alliant has $10,000 locked up for a while.

That said, is installment utilization really that big of a deal from a FICO standpoint? There's a big difference between a person's credit cards being maxed out and a person having a new car loan that's just being paid down.

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I am pretty sure Alliant doesn't do 100k SSL's.  If a person did take out an SSL of that size, however, he shouldn't pay it down to 10%.  As you say that's just choosing to paying Alliant interest on 10k.  I would pay pretty much any big SSL down to < $70, whether it was an SSL for 1k, 10k, or 100k. 

Huge SSLs (or laddered SSLs) are a bad idea in my opinion because they draw the attention of the LOs to the games you are playing.

[Anonymous]

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@Anonymous wrote:

1 4 yo collection

1 Discover CC $2500. 1% uti.

2 30 yo inactive accounts still reporting.

Is that thin enough??

I'm ready to go to work.

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I like your idea of making your account a bit thicker.  Adding a couple more credit cards and an SSL seems like a good idea.  The folks in the rebuilding forum may be able advise you on how to get the collection removed.

[Anonymous]

CGID

Did you see post 17 of this thread where I asked about a $10,000 SSL to soften the blow of a $15-20k installment I will taking out in a couple months??

Does that make any sense??

[Anonymous]

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@Anonymous wrote:

CGID

Did you see post 17 of this thread where I asked about a $10,000 SSL to soften the blow of a $15-20k installment I will taking out in a couple months??

Does that make any sense??

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Post #17 of this thread was made over a year ago by someone else.  Are you sure that is what you meant?

You actually asked about this on post #1120.  I then replied to your question on post #1121.  I will reproduce below what I said there.  You'll see that I don't have a problem with the 10k loan, but that in general I think that using big SSLs to soften installment util impact is more trouble than it is usually worth.    Here is what I said...

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People have kicked around that idea for a long time on this thread.  In theory it is quite possible to use SSLs to lower one's installment utilization on a big "real" loan.  For example, in theory, one could take out 30 loans of 10k each, one new loan every two weeks, paying the loan down to $50 each time and unlocking the funds to prepare for another loan.  Eventually you'd be able to take a "real" auto loan for 29k and have the installment util at < 9%.  In theory.

But in practice it takes a lot of loans to do that.  That's a lot of work, and a long time, and for most people a substantial hit to their AAoA.  Most importantly you risk drawing the attention of the lender by these games you are playing.  Just doing the SSL technique once harms the lender slightly (due to the overhead assicated with that loan).  Doing it over and over and over again would likely get you noticed by the loan officers and would multiply the expense incurred by the lender many fold.

I see no particular reason not to do this once for a 10k amount, if you want, though we have not tested Alliant's willingness to do SSL's of that size.  It probably doesn't make them scrutinize stuff any more than they would for a $500 loan, but that's just a guess.