Adding an installment loan -- the Share Secure technique

[DaveInAZ]

I wonder is a secured installment loan is worth the bother for me. I see the "no recent installment loan" line in items hindering my score only on FICO scores from TU. The thing is that I do have 2 installment loans, well, one and a "half".

I took out a $10k car loan in Feb. 2015 from a small local credit union, but they only report to EQ & EX. The loan is 60 months w/1.99% on a 2013 car I bought from Hertz, so no way will I refi or pay off early.

The "half" instalment loan is my mortgage. I filed BK7 in 2010, and told my attorney I wanted to reaffirm my mortgage - I had decent equity, could afford the payments, and I wanted to stay in the home as I enjoy it very much. He argued against reaffirming but when I told him I absolutely will reaffirm and he he woudn't do it i would find another attorney he agreed. I checked the BK filing papers and he had checked "intend to reaffirm" on the mortgage, so I thought all was good. But I didn't know that I had to sign a reaffirmation agreement along with all other parties, that's what I was paying an attorney for. I only found out after discharge when I called the bank to resume auto payment from my bank account and they refused, telling me since my mortgage was discharged in BK they could not "take" the money from me, they could only accept "voluntary" payments sent to them. So my BK attorney pulled a fast one on me, but that's water under the bridge. And to complicate things when I looked into refi'ing because the property is a manufactured home on a rural 10 acre property I can't do a cash out refi, only refi the current balance. The current mortgage has decent terms, so I'm not going to incur thousands of dollars in refi expense just to get the same loan balance reporting to the CRAs.

So again, wonder is a secured installment loan is worth the bother for me? My EQ & EX Vantage/Fako scores which have the car loan are very close to my TU Vantage score. I only get a TU based FICO from BoA, Synchrony/Walmart & Discover, so I'm not sure if EQ/EX FICOs are higher with the car loan.

[Anonymous]

Hi Dave.  As per the guidance, if you already have an open installment loan on your report, then there is no value in implementing the technique:

Who will not benefit from this technique?
*  People who already have an open installment loan.

You already have an open installment loan on your EQ and EX reports.

I could not figure out from your post whether an open mortgage appears on your TU report.  If it does, then you will get no benefit to your TU FICO 8 from the technique.  If it does not appear (and you have no other open loans with TU) then you would get 20-30 points extra to your TU score.  (It sounds like you have a BK, therefore the value may be less for people with a major derog.)

[Anonymous]

So today I got approved for the SS loan and it is showing up on my Alliant account page. I'm a little unclear of the next step- do I transfer $420 now and also continue to let the autopay take out $9.21 on my scheduled date of May 1st? Or do I wait until after May 1st to make the $420 payment?

[Anonymous]

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@Anonymous wrote:
So today I got approved for the SS loan and it is showing up on my Alliant account page. I'm a little unclear of the next step- do I transfer $420 now and also continue to let the autopay take out $9.21 on my scheduled date of May 1st? Or do I wait until after May 1st to make the $420 payment?

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Hello IMD.  I have reproduced the revelvant section of the guidance below (STEP 4: PAY IT DOWN) in blue ink.  You'll see that you first locate the loan and all the autopay information on your web portal. 

After that ("next") you "pay off a good chunk of the loan... like $420." 

Then after that you wait for the first scheduled autopay to go through.  At which point you manually delete the autopay.

Then you make your final payment to bring your balance down to $44.

Could you review the guidance below and let me know if you understand it?  After that be sure to go back to the original guidance and read the instructions after that too.

STEP 4: PAY IT DOWN.

To start with, you will want to make sure you locate where the new loan account is on your online banking portal.  Just log in to the Alliant portal with your username and password and you will by default be taken to the Account Summary page.  You will now see your Share Secure Loan as a new account, along with the Savings account that you are used to seeing.

You will see a DUE DATE and PAYMENT AMOUNT for that loan.  For example, the due date and payment amount might be May 9 and $9.19.  Write both of those down (whatever the date and amount are).  Hopefully you chose a date that is maybe 7-10 days from when the loan was approved.  Later is fine too. 

Next you want to locate the Autopay that was set up by the loan officer.  To do that, go to the TRANSFER MONEY tab at the top of the page.  Then look to the far right margin.  You will see several links.  Look for the one that says Scheduled Transfers.  Click on that.  You will be taken to a page that shows an automated transfer from the Savings account to the Loan account.  That's a way of automatically paying the amount due each month.  Do not try to delete it or change it.  You can't do that -- yet.  The test cases we have done so far seem to indicate that you need to pay it ahead a good bit AND also wait for the first transfer to go through before it will permit you to delete the transfer.

Next pay off a good chunk of the loan.  Personally, I would start with something really simple.  Like pay off $420 of the loan amount ($500).  Your eventual goal is to get it down to just under 8.99% (i.e. a loan balance of $44).  But more than one person has reported that it can take a few months to get the autopay turned off and then confirm that it is really turned off.  So if you start with $420 you should still have a good buffer if a few more autopayments go through.

The way to make a payment (whether big or small) is to go to the TRANSFER MONEY tab.  Just set up a one time transfer of $420 from your savings to the loan.  Simple. 

When you have executed that, go back to the Account Summary page.  You will see that the Current balance is very low -- around $80.  You will also see that the Due Date has been pushed out way WAY into the future.

The next steps are easy. 

(a)  Wait for the first autopay to go through.  If the autopay has changed so that the next "scheduled transfer" date has been pushed way ahead in time, ignore that.  It is likely that your autopay will still go through on the first date that you agreed to.  Wait until a couple business days AFTER that date.  Then look in your savings account.  You should see that the payment still went through.  Your loan balance is now smaller, maybe $71 or so.

(b)  Now go back to that recurring transfer that your loan officer set up.  If you try to delete the autopay before it has gone through once, most people report getting a big red error message.  So now that you have waited till after the first autopay, you can delete it.  Just click DELETE.  It will ask you if you are really sure.  Say yes. 

Your autopay should now really be deleted.  Note that some people have reported success at deleting the autopay a day before the first autopay was scheduled to go through (the big red error message seems to vanish the day before, roughly).  But that may require more work and careful timing than you care to invest.  That's why the guidance above gives a way that is guaranteed to work: wait till after the first autopay goes through, then delete. 

(c)  Make a final payment to bring your loan balance down to $44.  Your amount owed will then be < 9% of the original amount, which is what this technique is all about.

[DaveInAZ]

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@Anonymous wrote:

Hi Dave.  As per the guidance, if you already have an open installment loan on your report, then there is no value in implementing the technique:

Who will not benefit from this technique?
*  People who already have an open installment loan.

You already have an open installment loan on your EQ and EX reports.

I could not figure out from your post whether an open mortgage appears on your TU report.  If it does, then you will get no benefit to your TU FICO 8 from the technique.  If it does not appear (and you have no other open loans with TU) then you would get 20-30 points extra to your TU score.  (It sounds like you have a BK, therefore the value may be less for people with a major derog.)

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That was the real question in my long rambling post - since TU is the only CRA that has no installment loan, would it boost my TU based FICO score if TU did have an installment loan reporting? No, my mortgage is reporting as included in BK, $0 balance, but never late (and still never late, but no one knows that but me & the lender). My mortgage was one of 7 derogatory accounts reporting as IIB. They were due to fall off my CR between April to Aug, and I just got TU to early exclude them all. My TU FICO used to have the comment "serious delinquencies" in addition to "no recent installment loans", now the delinquencies comment is gone, and my TU FICO jumped from 677 to 720, and the only negative comment is lack of installment loans.

Since I have access only to TU based FICO scores from my CCs, I decided to order a MyFico 1B report for EQ. It looks like I need to call in to verify my ID. if I see a significant difference between my EQ FICO & TU FICO, then I may look at getting an installment loan that will report to TU. But then, EQ still reports half of my IIB derog accounts & TU doesn't, that may be a factor.

EDIT: Pulled a 3 bureau report, TU at 720 while EQ & EX both stilled mired at 688, but EQ still has 2 of my derog BK accounts w/lates, while EX still has 5. So I'm not going to worry about an installment account for TU until I can compare them on equal footing with no derog IIB accounts, August at the latest.

[steelholder]

I know this may have already been answered but how long does it take to unfreeze funds after you make your initial payment of 420? Would you see that amount unfreeze and be available immediately after? Thanks.

[Anonymous]

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@steelholder wrote:
I know this may have already been answered but how long does it take to unfreeze funds after you make your initial payment of 420? Would you see that amount unfreeze and be available immediately after? Thanks.

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Can anyone answer our friend's question here?  I think the answer may be something like "two minutes after you make the payment" -- assuming that the payment is being made as an internal transfer from the Alliant savings account to the Alliant SSL.

But I don't really know.  The people who read this thread who have done their SS loan recently are more likely to know the answer.  Certainly the funds are unfrozen within a few business days, but as I say it might be much quicker.

[Anonymous]

I'm just waiting for mine to report. $40.06 balance. Managed to get auto pay shut off 3 days early( at least it shows no scheduled transfers). Weird thing is Equifax is showing all my credit cards as installment loans and my closed installment loan as credit card. Scores are 735ish to 750ish before. Will report back when it reports.

[Anonymous]

Starting my SSL journey now.  Just waiting on my $510 funding to appear.

[Anonymous]

Thank you, got it.