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HOWTO: Get a +62 point FICO 8 jump on a clean file

Valued Contributor

HOWTO: Get a +62 point FICO 8 jump on a clean file

I had no credit history, so I opened a $500 'Credit Builder Loan' (also known as SSL, Share Secured Loan) at a credit union to build payment history.

 

I set it to auto-pay $42.35 monthly from my checking account, and planned on waiting a year to check my credit score.

 

To my surprise, this is what happened at the 1 year mark, with just this loan account on a clean file:

(If I had been reading these forums before I attempted to build credit, I would have known that @Revelate already discovered a low installment utilization boost (20 to 30pts). The jump shown here includes additional points from aging.)

 

ssl_jump_chart.png


Time travel advice to my 17 year old self: "Join a credit union right now. Save $500 that you won't need for 1 year. When you turn 18, open a credit builder loan for $500. Set the loan to auto-pay. In the month of the final payment on that loan, when all aging values have reached 1 year, check your FICO 8 scores - they'll probably all be in the 'Very Good' range. Now apply for 2 bank-issued cards, and skip the starter/retail cards entirely."

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

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Re: HOWTO: Get a +62 point FICO 8 jump on a clean file


@CassieCard wrote:

I had no credit history, so I opened a $500 'Credit Builder Loan' (also known as SSL, Share Secured Loan) at a credit union to build payment history.

 

I set it to auto-pay $42.35 monthly from my checking account, and planned on waiting a year to check my credit score.

 

To my surprise, this is what happened at the 1 year mark, with just this loan account on a clean file:

(If I had been reading these forums before I attempted to build credit, I would have known that @Revelate already discovered a low installment utilization boost (20 to 30pts). The jump shown here includes additional points from aging.)

 

ssl_jump_chart.png


Time travel advice to my 17 year old self: "Join a credit union right now. Save $500 that you won't need for 1 year. When you turn 18, open a credit builder loan for $500. Set the loan to auto-pay. In the month of the final payment on that loan, when all aging values have reached 1 year, check your FICO 8 scores - they'll probably all be in the 'Very Good' range. Now apply for 2 bank-issued cards, and skip the starter/retail cards entirely."


I'm quite sure you could be giving better advice than that haha.

 

Funny thing the trick back in the late 80's / early 90's for college credit building before college targetted credit cards became the rage, was to take that $500, get a secured loan, and then go around to the rest of the banks in the local area and do the same darned thing like 5 times.

 

Sadly like you I didn't know these things at 17, too bad as I had a few thousand bucks in the bank that I could've played games with 15+ years before I really started playing hard Smiley Happy.




        
Message 2 of 9
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Valued Contributor

Re: HOWTO: Get a +62 point FICO 8 jump on a clean file


@Revelate wrote:

@CassieCard wrote:

Time travel advice to my 17 year old self: "Join a credit union right now. Save $500 that you won't need for 1 year. When you turn 18, open a credit builder loan for $500. Set the loan to auto-pay. In the month of the final payment on that loan, when all aging values have reached 1 year, check your FICO 8 scores - they'll probably all be in the 'Very Good' range. Now apply for 2 bank-issued cards, and skip the starter/retail cards entirely."


I'm quite sure you could be giving better advice than that haha.

LOL so true. A million little things...

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Keeper of the Scrolls of ResilienceEQ FICO Resilience Index Score Leaderboard

48 forum members have shared this new credit score. Share yours today!

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Re: HOWTO: Get a +62 point FICO 8 jump on a clean file

@Revelate  This is brilliant... My son is turning 17 in october.. I would like to do this for him.  What credit union do you recommend? Thank you!!!

June 2020 EQ-750 TU-825 EX-813
UTIL: 1%


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Super Contributor

Re: HOWTO: Get a +62 point FICO 8 jump on a clean file

For a SSL, you need $500 for all of 15 minutes. 
The $500 goes into a savings account, where you agree not to withdraw it.

 

Sign the paperwork. 

The bank gives you $500 which goes in your wallet.

You make small monthly payments to pay down the $500 over many months.

 

You earn interest on the $500 in savings.

You pay a bit more than that in monthly interest to the CU.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
Message 5 of 9
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Valued Contributor

Re: HOWTO: Get a +62 point FICO 8 jump on a clean file


@AI_JMV wrote:

@Revelate  This is brilliant... My son is turning 17 in october.. I would like to do this for him.  What credit union do you recommend? Thank you!!!


Pretty much any credit union offers this 'Credit Builder Loan'. They work much better than online 'self lender loans', because the payment you make each month (mine were $42.35) reduces the loan amount and goes right back into your savings/checking.

 

You do not have access to the full $500 right away - it will take 12 monthly payments for it to be fully back in savings/checking. With the online versions, you have to wait the entire year before getting that $500 - they don't give back each monthly payment along the way.

 

Like NRB525 said, you will pay some interest on this - mine came to around $8.20.

 

There is a major caveat to this: When the final payment is made on that loan, the next month it will report as CLOSED/PAID or similar. FICO 8 scores will drop a lot!  So you have a certain window of time to apply for a couple of cards - after the loan drops to ≤ 9.0% remaining and before it closes.

 

But if you can manage to find a bank that will keep it open longer, at that same low level, you get to keep the boosted scores for as long it is open. See this thread: https://ficoforums.myfico.com/t5/Personal-Finance/The-Quest-for-an-SSL-alternative-to-Alliant/m-p/51...

 

Also note that my results here include a lot of points from aging to 1 year on all aging metrics. Its probably something like +30 for the loan at 8.47% and +30 or so for the aging.

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Keeper of the Scrolls of ResilienceEQ FICO Resilience Index Score Leaderboard

48 forum members have shared this new credit score. Share yours today!

Message 6 of 9
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Regular Contributor

Re: HOWTO: Get a +62 point FICO 8 jump on a clean file

Thank you so much!!

June 2020 EQ-750 TU-825 EX-813
UTIL: 1%


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Super Contributor

Re: HOWTO: Get a +62 point FICO 8 jump on a clean file


@AI_JMV wrote:

@Revelate  This is brilliant... My son is turning 17 in october.. I would like to do this for him.  What credit union do you recommend? Thank you!!!


An excellent credit union for the savings secured loans is Navy Federal.


Total revolving limits 653000 (575000 reporting)

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Re: HOWTO: Get a +62 point FICO 8 jump on a clean file

Thank you!

June 2020 EQ-750 TU-825 EX-813
UTIL: 1%


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