@mster wrote:
In for 1 $500 secured installment loan. I'll report back on results.
Is it possible to pay the loan down from $500 to $45 *before* your first statement cuts so that it never reports at 100% util to avoid that initial 5-10 point drop while still getting the benefit?
I don't know if I can answer that accurately. In my case, pretty much as soon the check was deposited, the credit line appeared on my CR's. I wanted to verify the loan reported correctly, though. Then a week after the loan reported, I paid down the to $45. Very next reporting cycle Alliant reported correctly that I had a $45 balance.
So I verified the 9 point hit by design, making sure tradline reported correctly and I wanted to know how much of a hit the loan would cost me in scoring points.
It might be possible, to do what your inquiring about. But the end result will be the same.
If I know the loan cost say 9 points, I have better feed back on the second reporting cycle.
Real Example Experian starting score 796
First tradeline reported to CR: New trade line + loss of AAoA= -9 points (Score 787)
Next update to tradeline reported: Paid down loan to 9% UTI= +30 points (Score 817)
Total gain from where I was before getting the loan= +21 points
Even if you can pay the loan down to $45 before the initial tradeline reports, in reality, that loan cost you points, whether you see it or not. In my case the nine point decrease is because 1. It's a new loan (New Credit), and, 2. It has impact on my AAoA (Average Age of Accounts). Those nine points will be returned in time assuming I don't apply for a loan in say two years. The AAoA will recover in about a year, in my case. This would be different for everyone else depending on credit profile. The new tradeline or loan will mature in about two years, gaining points in the New Credit category. So theoretically those nine points will return in two years in my case, again assuming I don't apply for any further credit.
