Adding an installment loan -- the Share Secure technique

[SouthJamaica]

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@Cookiegrabber wrote:

My credit reports are pretty much blank slates (no score, no accounts, no derogatory marks, probably just 1-3 hard pulls in the last couple of weeks), and I need some help deciding what to do with this SSL. I'd appreciate if someone could help out.

I got approved for a $200 Discover secured card last Friday.

I also just joined a credit union and got approved for a $200 SSL with a 10-year term.

(Once it finalizes, I plan to update the Quest for an Alternative to Alliant thread.)

Anyway, with those 2 approvals in hand, I'll be starting my credit history with 2 accounts that open at about the same time.

I'm hoping the Discover card will get graduated to an unsecure version within a year, but when that happens, they'll close the secured card and issue a new one, bringing my AAoA down by 50%. Once I get any sort of score, I'll also be applying for some basic $0 annual fee unsecured cards in order to have a higher number of older accounts in the future (and to start growing credit limits ASAP).

I'm not concerned about getting a high-rewards card in the first 6 months or anything like that. I'm just hoping to have as nice a score as possible by the time a few rounds of temporary negatives like hard pulls and new account penalties wear off, without spending any significant amount of money in the process.

So in your opinion, what should I do with this SSL? Would I benefit more by keeping it for 5-10 years to help anchor my AAoA for the next few years while I get more, better cards, or should I immediately pay off 91.1% and reap whatever score benefits I get from that? Or could I do something in between and pay off 70% to have the loan expire in 3 years instead of 11 months?

Thanks in advance for any advice.

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Certainly what you should do is pay it down to $18. And leave it like that for 9 years.

[Anonymous]

Hi Mitsuhashi.  The key thing with the SSL Technique is how the bank handles an early paydown (e.g. paying off most of the debt in the first few months of the loan).  Some banks and CUs will say that you don't have to make another payment for many years -- i.e. the "due date" for the next payment get pushed way into the future.  Others will still require that you keep making the same monthly payment -- and therefore the big initial payment will cause the loan to get paid off in a matter of months.

Can you clarify which of those two it is?

[Cookiegrabber]

Sorry guys, I know some of you are waiting for clarification. I tried to get the loan finalized today but couldn't get through after 20 min of being on hold. I'll try again later. A loan origination rep did tell me I don't need to submit any documents.

[Anonymous]

This is very interesting. I've never heard of this method before. I will definitely be trying this when I can save some money up. Thanks for the info!

[Cookiegrabber]

I've updated the Quest for an SSL Alternative to Alliant page with my results so far. It's a mixed bag.

[Cookiegrabber]

Just sharing some data points from someone starting with no credit score.

5/5/18: DCU SSL with 8.9% remaining popped up on reports

• TU: VS3.0 605 / FICO 600
• EQ: VS3.0 598 / FICO 600

5/10/18: Discover it Secured CC popped up on reports

• TU: VS3.0 650 / FICO ?
• EQ: VS3.0 643 / FICO ?

I have 2 INQs each on TU and EQ. I don't know my EX because the file they have on me is all screwed up -- they're sending me a hard copy to look for corrections. Can't use CCT either because it's Experian.

I don't know what newbie scores are usually supposed to look like, but I'll take 643 and 650 in the first month, even if they're VS scores. Thanks CreditGuyinDixie!

[Stugotsv10]

how would one pay it down to $18 and leave it for years? wouldn't the next payment just pay the loan off???

[Anonymous]

At some banks/CUs, the act of making a big payment pushes the due date for the next payment way into the future.  This is a nice feature called "pre-payment" and it is essential to the SSL technique working. 

At other banks/CUs they accept the big payment but still require you to make whatever the monthly payment was supposed to be every month.  There (as you observe) the big payment causes the loan to be paid off much earlier, which a person implementing the SSL technique does not want.

We have found three alternatives that appear to work.  You can find out about them in the Quest for An Alternative thread.  I would like someone to test out Ideal (one of the three) to confirm that it works, but the other two are well tested.

[Stugotsv10]

Do you know of a bank or CU that that will do this push future payments out for years? maybe one that does not do a hard inquirt as well if its a secured loan?

[Anonymous]

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@Stugotsv10 wrote:

Do you know of a bank or CU that that will do this push future payments out for years? maybe one that does not do a hard inquirt as well if its a secured loan?

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@Anonymous may have missed the last paragraph of my last message to you.  I wrote:

We have found three alternatives that appear to work.  You can find out about them in the Quest for An Alternative thread.  I would like someone to test out Ideal (one of the three) to confirm that it works, but the other two are well tested.