So I finally had 2 derogatory accounts fall off of my credit report & my score went up to 729. Now my AMEX credit card account is offering me a $3,500 personal loan pre-approval @ 13.22% with no penalty for extra payments or pre-payment. I don't have a good mix of credit as I only have credit cards & a home loan account that was closed in 2010 (divorce/sold house) & an Affirm loan that I got in hopes it would help my credit score (which was closed in January 2019). I don't need to buy a car, so a car loan is out.
Assuming I will make timely payments, would it be a good idea to get this loan & use the method I'd read about here in the past (paying back the bulk of it quickly & paying off the very small remainder in monthly payments for the entire length of the loan)? If it would help FICO8, I'm also wondering about predictions of the impact of doing so on the upcoming FICO10 algorithm which I read might not be so friendly to personal loans (or is that only when using them to pay down credit card debt which I won't be doing?).
I'd like to be in a position to buy a house in Spring 2021, so I want to bolster my credit score as much as possible since I can't improve the only two other factors hurting me ... (1) my Credit Age (2) the 60-day late payment that will fall off in December 2021 that's been charged-off by the credit card company (though if you have any ideas for removing that, they'd be welcome. It was $29. My mother fell critically ill & required my full-time intervention which remains through today, so if there are any hardship exceptions in getting stuff like this removed, it might apply.)
Thanks in advance,
Kimberly
Yeah I don't have high credit card utilization & don't plan to (always below 9% ... usually at 3-4%). But I can't change my Credit Age. It would be great if I could get rid of that one 60-day late pay. But the other thing that *could* be in my control that some score-reporting sites mention as hurting my score is Credit Mix ("No Recent Installment Loan data"). That's why I'm keying into that as a potential source for taking my score from Good to Very Good.
Kimberly
@HomeBuyerSpring2021 wrote:So I finally had 2 derogatory accounts fall off of my credit report & my score went up to 729. Now my AMEX credit card account is offering me a $3,500 personal loan pre-approval @ 13.22% with no penalty for extra payments or pre-payment. I don't have a good mix of credit as I only have credit cards & a home loan account that was closed in 2010 (divorce/sold house) & an Affirm loan that I got in hopes it would help my credit score (which was closed in January 2019). I don't need to buy a car, so a car loan is out.
Assuming I will make timely payments, would it be a good idea to get this loan & use the method I'd read about here in the past (paying back the bulk of it quickly & paying off the very small remainder in monthly payments for the entire length of the loan)? If it would help FICO8, I'm also wondering about predictions of the impact of doing so on the upcoming FICO10 algorithm which I read might not be so friendly to personal loans (or is that only when using them to pay down credit card debt which I won't be doing?).
I'd like to be in a position to buy a house in Spring 2021, so I want to bolster my credit score as much as possible since I can't improve the only two other factors hurting me ... (1) my Credit Age (2) the 60-day late payment that will fall off in December 2021 that's been charged-off by the credit card company (though if you have any ideas for removing that, they'd be welcome. It was $29. My mother fell critically ill & required my full-time intervention which remains through today, so if there are any hardship exceptions in getting stuff like this removed, it might apply.)
Thanks in advance,
Kimberly
No it would not help you at all. The best thing you could do for your mortgage scores from here on out would be to
(1) make no applications for credit
(2) pay your revolving balances down as much as you can
(3) in the months leading up to the mortgage, maintain your revolving accounts so that all but one of them report a zero balance, and the one that does report has a small balance
As far as getting the charge-off removed, I would try sending verification letters to the credit bureaus. Sometimes you get lucky and that expedites getting the negative removed.
Thanks Janus. How would what you're suggesting differ from what I described? From what I understand thus far, I can still pay it down immediately to a very low balance that I pay off over 36 months (if they give me the max time they were promoting). And it's dealing with a lender that I already have a track record with who I think might be more likely to give me a loan. I'm self-employed & have been my mother's primary caretaker for 5 years, so my income is unsteady & all over the place in terms of monthly earnings. So I'm a little more hesitant to go outside of entities I already have a proven history with.
If there is an advantage to SSL I don't know about that makes it preferable though, I'd love to know.
Thanks!
Kimberly
@Anonymous wrote:I definitley wouldn't get a regular loan @ almost 14% interest. While the amount is low it still adds up over time.
If you really want the small boost that "credit mix" gives you for an open loan, I'd go with an SSL. That way you can pay it down to a very low UT threshold somewhere between 60-80% paid, then ride out the min payments for a while. Just make sure to do this12 months prior to a Mortgage, at the very least.
