Installment Loan: Wait or Now?

[Anonymous]

After receiving much help from CGID I am ready to take out an installment loan. I'll be doing this for two reasons: 1). To eventually boost my FICO and FICO 8 scores and 2). Because I could actually use a person loan to buy out of business partner. 

The advice in the Adding an Installment Loan -- The Share Technique thread is excellent and I'm mulling over whether to use this technique before applying for the actual much larger loan I'll eventually want. There are only two potential drawbacks that could effect me using this technique. The first is that it clearly says while so far, only soft pulls have been reported, it also states this is not set in stone and do NOT use this technique if a hard pull might be damaging. I believe this to be the case with me, since I have one hard pull on my file now from a cable company I did not even authorize. Another hard pull would make 2 and hurt my chances of receivning that actual larger loan I'll need. So this concerns me some. 

My other concern is one of time. It doesn't sound like it will take all that long from opening the savings account, applying for the loan, paying it down, and having them report. A month tops? Maybe two? I can certainly wait that long and would be worth it for a 20-30 increase in my FICO 8 score. 

However, something is also telling me to just go straight for the larger personal loan and bypass the Share Technique. For one thing, it would be quicker and bypass a step I'm not sure is necessary. Secondly, it just easier. But here is my other main concern:

1). Because I'm self-employed, I do not receive normal pay stubs. My tax returns show a net loss for last year. This is very bad for income verification obviously.

According to my credit cards that give me free FICO scores, TransUnion and Equifax are showing an 801 FICO score. This is also true according to CreditKarma. However, according to CreditCheck my FICO 8 scores range from 737-749 from the 3 CRA. CreditKarma shows I am pre-qualified for a $20k loan. However, I don't know what pre-qualified means. I'm assuming they will still pull a hard inquiry and will want income verification, which will hurt me. But will that be the case even if I go through the Share Technique? This is why I'm not sure it's worth doing the Share Technique. 

Any advice would be appreciated. Again, my main concern is the major installment (personal) loan I'm looking to take out and I'm wondering if the Share technique will even matter or if it's worth doing. 

Thanks.

[Anonymous]

One last thing:

Not sure if the lender will ask for bank statements, but I will have over 50% of the loan amount that I'm looking for in liquid assets. 

[SouthJamaica]

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@Anonymous wrote:

After receiving much help from CGID I am ready to take out an installment loan. I'll be doing this for two reasons: 1). To eventually boost my FICO and FICO 8 scores and 2). Because I could actually use a person loan to buy out of business partner. 

The advice in the Adding an Installment Loan -- The Share Technique thread is excellent and I'm mulling over whether to use this technique before applying for the actual much larger loan I'll eventually want. There are only two potential drawbacks that could effect me using this technique. The first is that it clearly says while so far, only soft pulls have been reported, it also states this is not set in stone and do NOT use this technique if a hard pull might be damaging. I believe this to be the case with me, since I have one hard pull on my file now from a cable company I did not even authorize. Another hard pull would make 2 and hurt my chances of receivning that actual larger loan I'll need. So this concerns me some. 

My other concern is one of time. It doesn't sound like it will take all that long from opening the savings account, applying for the loan, paying it down, and having them report. A month tops? Maybe two? I can certainly wait that long and would be worth it for a 20-30 increase in my FICO 8 score. 

However, something is also telling me to just go straight for the larger personal loan and bypass the Share Technique. For one thing, it would be quicker and bypass a step I'm not sure is necessary. Secondly, it just easier. But here is my other main concern:

1). Because I'm self-employed, I do not receive normal pay stubs. My tax returns show a net loss for last year. This is very bad for income verification obviously.

According to my credit cards that give me free FICO scores, TransUnion and Equifax are showing an 801 FICO score. This is also true according to CreditKarma. However, according to CreditCheck my FICO 8 scores range from 737-749 from the 3 CRA. CreditKarma shows I am pre-qualified for a $20k loan. However, I don't know what pre-qualified means. I'm assuming they will still pull a hard inquiry and will want income verification, which will hurt me. But will that be the case even if I go through the Share Technique? This is why I'm not sure it's worth doing the Share Technique. 

Any advice would be appreciated. Again, my main concern is the major installment (personal) loan I'm looking to take out and I'm wondering if the Share technique will even matter or if it's worth doing. 

Thanks.

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1. If you have the money sitting in savings to buy out your partner, why do you need a loan?

2. The small share secured loans don't do hard pulls and don't care about your income, they're totally secured.

3. Credit Karma's recommendations are completely meaningless; disregard.

4. I can't imagine why you're concerned about your FICO scores. If I were you I wouldn't be taking out any loans of any kind.

5. Your statements about your various scores don't add up. Credit Check Total gives you accurate readings on FICO 8 from 3 bureaus, so it doesn't make the slightest sense for the scores from your credit card companies to show a 60 point divergence from those.

[Anonymous]

@SouthJamacai

1. If you re-read the post you'll find I said I had 50% of the loan amount I'm seeking and that it is liquid in a bank account. There are several reasons why I want to keep this money where it is, most having to do with accounting and using the interest write off. But I don't see how any of this is relevant to my question.

2. My credit cards and CreditKarma refelect plain FICO scores while CreditCheck shows FICO 8 scores. These are two different scoring methods. As to whether this "adds up" or not, I do not know. I'm not at all familiar with FICO 8. 

[newhis]

CK uses VantageScore not FICO. CCT report FICO scores.

[Anonymous]

Thank you newhis!

Would you know if it's normal for the VantageScore method used in FICO 8 scoring to be 50 points lower than the method used for a standard FICO score? Or does something still not "add up" as SouthJamaica says?

CreditCheck is showing the correct balances and credit lines, but maybe something hasn't refreshed yet?

Thanks,

[newhis]

For some people VantageScore is higher than FICO, for others FICO is higher and I have seen a few reports that both are the same.

I think they value some things more.

I remember my DW got the best auto loan with 740 TU FICO. Score is not the only thing in a credit app. 

[Anonymous]

iwan2,

There are many different scoring models out there.  VantageScore 3.0 is one of them, which Credit Karma uses.  FICO 08 is also very common and the scores provided by Credit Check Total and many credit card companies such as Amex, Discover, etc. FICO 08 scores are the most commonly talked about on these forums since they are the most widely used out there, generally speaking.

There is no such thing as a "regular" FICO score.  There are different versions of FICO scores but none is just "FICO" - it can be FICO 8, 9, 2, 4, 5, bankcard, auto, etc.  All of those scores will be based on the information from one of the reporting agencies, Experian, TransUnion or Equifax.  This means there's 3 common versions of every type of FICO score; I believe in total there are something like 50-60 different FICO scores that one person can have.

The most common is FICO 08.  When checking your FICO score if you look at the fine print it will say on the page somewhere what version and bureau was used that generated the score.  For example, "Your FICO® Credit Score is based on your TransUnion credit report using the FICO® Score 8."

A score generated from one source, say CCT and another from another place such as your Discover account at the same time that use the same scoring model and bureau are going to be identical scores.  If the scores are different, it's either a different scoring model or a different bureau was used for the data.

VantageScore 3.0 scores are sometimes higher, sometimes lower and sometimes relatively equal to the FICO 08 scores from the same person.  There have been reports of people having these scores be 50-100 points off where others report them dead on.  I think in general most people find that they are within 20-30 points, plus or minus, but again that's just a generalization.

[Anonymous]

Thanks all,

I do have a Discover card which is also showing lower than CK and my other credit cards. I'll wait for that to update this month to see where it is. Otherwise, I can't imagine what is making up this large difference. I have one +30 from 2014, 1 hard inquiry, and I haven't had any installment (or mortgage) loans in a while. These are the only negatives I see. My AoA is very good. I'll just wait and see. 

Thanks,

[Anonymous]

Discover gives you a TU FICO 08 and CK gives you a TU VS 3.0 and a EQ VS 3.0 - the scores from CK have absolutely no correlation to the more important one that you get from Discover.