@cjc343 wrote:First, some math, may or may not be correct...
A $500 savings-secured loan with a 48 month term is taken out at 2.9%.
The payments come out to $11.05/mo. Assuming no prepayment, a total of about $30.16 is paid in interest.
If $458 is immediately paid back, a $42 balance is left. Since the majority of the interest is no longer to be paid, approximately 3 billing periods are removed from the loan.
A $1/mo (actually $0.99) payment will cause the loan to be fully paid after 45 months without ever generating a statement with a nonzero minimum payment.
Total interest paid over 45 months is ~$2.38.
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Some questions, may not all be answerable, but if you know any of them or have any insight, it'd be much appreciated:
1. Any reasons why the math above is not true?
2. Earlier in the thread it sounded like Alliant will not support $1 recurring monthly transfers. Can I push payment from my bank account (bill pay) directly to the loan instead? Or must each payment be set up manually through Alliant?
3. Is there a limit to the number of savings secured loans you can have open at once (with Alliant)?
4. Is there a # of installment lines where further open installment lines no longer have a positive impact on scoring?
5. Is there an installment utilization rate below which further decreasing utilization (by opening and prepaying more or larger secured loans) no longer has a positive impact on scoring?
I didn't check the math but it's close enough for government work.
They do not support recurring transfers for anything but the minimum payment; HOWEVER, you can schedule $1 by hand. I'm not bothering with every month, I'm just doing one every six months but if you want to do it all by hand you can certainly set it up in the fashion you want... personally ain't got no time for that.
I don't know if there's a limit; however, I'm not going to keep more than one with any given lender; SDFCU has a similar product that apparently does just as well from Jamie's testing.
Regarding # of installment lines, hard to say; it's probably either 1 or 2 for 99.9% of the scorecard, can't see where there'd be anything like the number of accounts with balances revolving calculation which does appear to be based on how many revolving tradelines you have.
Final point, if it's just utilization, then any sized loans will do and you can't really get much better than under 10% or maybe under 20% based on data so far. There will be a breakpoint and it'll likely cap out there like pretty much everything else in the algorithm that we've been able to determine for similar metrics. Also there's some reason codes in the algorithm looking for age, so not just sitting on one's hands might be a disservice.
The big question is while I'm sure auto loans are included, and I suspect student loans may be too, not sure on mortgages. Auto loan I could trick out a couple of personal unsecured loans (when my credit is a little better probably) and beat down most auto loan utilization metrics quickly; not so sure on mortgage.
With only revolving accounts, not a single instalment account, reporting, I I just took out an Alliant savings secured loan with 12-month term, and immediately paid off 10%.
1. Will let it sit and report at 90% balance for a month
2. Then 79%
3. Then 29%
4. Then 19%
5. Then 9%
(Hoping that my electronic debit automated payments don't interfere)
@manyquestions wrote:
I want to be sure I understand. When you pay down an Alliant CU secured loan ahead of schedule it does not shorten the term of the loan? If you take a $500 for four years you could pay it down 90% the first day and the length of the loan would still last for four years and not be shortened?
It will shorten it slightly because the same amount of interest won't be generated. As a result when payments do start, you'll lose a couple of months vs. the original term; however, you'll still get the majority.
Think on the 5 year term (did the math somewhere in this thread) could get on the order of 52ish payments easily out of 60, not shabby for some utterly trivial amount of money and the FICO win. Might even be able to do better by paying 95% or 99% but I didn't work that one out.
@Anonymous wrote:Okay, thanks. I actually have two auto loans as follows:
Bal Orig Util Auto #1 $1,714 $15,415 11.1% Auto #2 $18,249 $19,166 95.2% TOTAL $19,963 $34,581 57.7%
I was thinking of paying down the second one to try to bump my scores. I might drop the $2936 necessary to bring loan #2 below 80% to see if anything happens to my score. I really don't want to sacrifice the cash to pay it down to below 60%, but I would do it if I needed to.
Decisions...decisions...
At the moment I think it's aggregate; won't really get any indication otherwise unless my impending mortgage doesn't drop me as far as I expect.
Aggregate numbers, think there's a breakpoint in the 20 - 25 - 30 range but you won't get there with 3K to #2 based on napkin math.