Adding an installment loan -- the Share Secure technique

[CH-7-Mission-Accomplished]

To illustrate my point about the concept that just having an installment loan is the important part, I had a 15K share secured with Alliant that I immediately paid down to $100, so it was at 1% utilization.   It stayed there for about two years.

In January I got a car loan from Alliant for 30K.   I decided to pay off my SSL.   So I was at 100% of the original balance and my FICO scores did not decrease at all.

Don't get hung up on 8.9%.   Get hung up on having an installment loan reporting.

[SouthJamaica]

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@CH-7-Mission-Accomplished wrote:

There is such a huge emphasis in this thread about getting an installment loan, like a share secured loan, that you can immeidately pay down to 8.9%.   People are missing the point that the simple act of adding an installment loan, if you don't have one, will likely add 25 points to your FICO score.   It did for mine when my balance was at 100% of the original balance.

If you can get a 5 year share secured loan and pay it down to 50% and have it mature in 2.5 years, you will see wonders in your score.

Yes, you may get 30 points for having an installment loan at 8.9%, but it is gravy.   The important part is having an installment loan reporting.

Yes, you should try to find a lender that will let you pay down to 8.9% without reducing the repayment period of time, but if you can't find such a lender, just get an installment loan.

If people doubt this logic, just note how when people pay off their only installment loan, they often see a drop in FICO score fo 20 to 25 points.

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I didn't have that kind of experience.

While I don't recall what the exact effect was on FICO 8 when I opened an installment loan, I'm certain I did not get any significant score boost, if any.

When you open an installment loan, you get (a) your newest account date reset, (b) your average age of accounts lowered, and (c) usually a hard pull except in the case of most share secured loans.

In my case I didn't get a boost until I was down to 9%.

Perhaps if I'd let them linger longer, they would have had a positive effect, but if so I would never have known. I seriously doubt that most people get a 25 point boost in FICO 8 when they add a new, 0% paid off installment loan.

[Anonymous]

@Drusbo  WOW!  That's awesome.  I wish mine would do that.  :/

[Anonymous]

Sadly, looks like no one has found a new provider offering this ability.

[SouthJamaica]

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@Anonymous wrote:

Sadly, looks like no one has found a new provider offering this ability.

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Correct. The only one that definitely works is NFCU, which is not open to everyone.

[MrPepperoni]

anybody here with SSFCU SSL experience?

[FiveOhFour]

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@SouthJamaica wrote:

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@Anonymous wrote:

Sadly, looks like no one has found a new provider offering this ability.

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Correct. The only one that definitely works is NFCU, which is not open to everyone.

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darn, major bummer to see this is gone, when did it disappear and did the provider disappear or the details of the loan etc? What would be the closest thing to doing this? I have a very high score but I have never had a non credit card installment loan so that technically weighs me down. Should I just go ahead and finance a vehicle purchase and pay it off very quickly, or pay it down very quickly? I had to take care of my mother as she was dying of Parkinson's the last few years so forgive me I am not even recalling all the particular benefits of this method, I just had it bookmarked and was all ready to do it at one point. Once a loan of this type is paid off, does it still effect your average age of accounts even though its "closed" or no? and is that the same for car loans or small personal loans of a million dollars from my father, sorry I mean small personal loans. thanks

[Anonymous]

There are others check the Scoring Primer, some are listed there and read the links.

[FiveOhFour]

pardon my ignorance please but scoring primer? I have a lot to catch up on, is that part of the fico Report or a forum topic or what

[Anonymous]

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@FiveOhFour wrote:
pardon my ignorance please but scoring primer? I have a lot to catch up on, is that part of the fico Report or a forum topic or what

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@FiveOhFour look at the top of my signature it's linked for your reading pleasure 😉