nyccc2 wrote:
So I am rebuilding credit, I am AU on a couple cards and have a couple new of my own.
I want to add in a mix, I thought I'd do the following (I know it will cost me some interest, not so worried).
Tale a Cash Advance on my CC (I know, I know)
Take out a 1 year $1k Personal Secured Loan with the $1k as the Collateral.
Make large or semi-monthyl payments so I pay the loan off in 6 months.
Make small-ish payments on the $1k CC, maybe $100 per month.
When secured account released, pay off the balance on the CC.
I know, I'll pay bank interest on 1/2 a year on $1k ($50?) and Cash Advance Interest on a $1000 on CC for 6 months ($180) but for a $200 investment I get;
A paid Personal Loan
A cc with 6 months of payments AND then PIF.
Then I apply for CLI on the CC with my payment history AND with a new paid loan added to my mix.
I don't think it's a good idea. Yes, you will get additional points for "credit mix," but only for six months. (When an installment loan is paid off and closed, it stops counting towards "mix.") What good does that really do?
In the meantime, you'll have a $1K balance on a CC that wasn't there before. This will probably lower your score more than the points for "mix" will help it. Installment loans don't count for nearly as much in the scoring algorithm as revolving accounts do.
Also, FICO does not reward you extra for paying off an installment loan early, so you won't be squeezing out any points that way.
You'll also have a new account, which will ding you, and an inquiry, which will also ding you.
In my opinion, this plan will probably do more harm than good in the short run. In the long run, the only benefit you'll get is an additional account to count towards average age.
Not a good trade off, IMO.
