With an auto loan open and in good standing the ideal time to open a pledge/ssl loan is when a month or two before the auto loan is paid off.
you wouldn't actually gain anything tho
the pledge loan paid to under 9% would just stop you from losing points once your auto loan is paid and closed.
once your auto loan reaches less than 9% and it's your only installment loan that's the point at which you should get the max point boost
adding the pledge loan right at the end of the auto loan will just stop you from losing those points
I feel like adding a sub 9% b/l loan to an auto loan with greater than 10% b/l ratiowould actually lower the aggregate b/l ratio
[ (greater than 10% i e 35%)
+
(lower than 9% i e 8.9%) ]
/ number of loans (2)
=
21.95% aggregate loan b/l ratio.
But back to the part we can agree on
the OPs question is when it would be worth it to add a pledge loan
it would be worth it only when the open auto loan is paid to lower than 9%
{auto loan @ less than 9% b/l
+
pledge loan @ less than 9%}
/ number of open installment loans (2)
= aggregate installment loan b/l <9%
so it would, in my eyes, for sure be worth it at that point as a 'safety net' to prevent the well documented point loss associated with paying off your only open installment loan
@Jazee wrote:I've learned about the NFCU "hack" for score improvement to open a Pledge Loan, pay 90%+ of it off just to and an installment loan to your credit profile. I've got 4 cards and an auto loan. Perfect payment histories. FICOs at the time I would do this I estimate to be in the 720-760 range. My AAOA is almost 5 years. I'm planning on apping for an additional card or two in the next month or two one of which will definitely be a US Bank Card (if I prequal)
My gut is telling me at best doing this Pledge Loan and letting it report before apping for two new cards may at best be a net break-even on score effect due to the reduction in AAOA and already having an auto loan. Plus US Bank would see it as a new account which could turn them off right?
No you would not accomplish anything positive by doing it.
You already have the plusses earned by (a) credit mix and (b) having an open loan.
The only benefit that would come from such a loan would be if you had no other installment loans, which is not the case.
It might even cost you some points in some scoring models, depending on the rest of your profile.
@Jazee wrote:Thank you for the confirmation of what my gut was telling but clarifying the actual underlying mechanisms going on.
The Pledge Loan hack is seen on a lot of YouTube videos which in my opinion are aimed mainly at an audience that doesn't already have an installment loan like an auto loan (mainly people starting on their credit score journey or trying to rebuild.)
Would it build my internal score with Navy though with no negative effect on my FICO score to make it worth it from that prospective? (related to CLI requests with Navy)
P.S. The Auto loand was about $33K and is half paid off with a couple more years on it.
No it wouldn't.
Just put it out of your mind.