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Secured loan

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Anonymous
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Secured loan

Happy Thanksgiving, Everybody!
Not sure this is the right place for this post so I would appreciate your suggestions on that regard.
I was approved for a 500 secured loan at Citibank and I would like to know wether I should do the monthly payments until is paid off or I should pay off right away 50% or even more in order to raise my credit score. The loan is for 5 years and with a monthly payment of $12 or so.

Thanks for your time!
Message 1 of 10
9 REPLIES 9
Anonymous
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Re: Secured loan

Is this your only open loan?

Message 2 of 10
Anonymous
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Re: Secured loan

Yes, it is
Message 3 of 10
Anonymous
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Re: Secured loan

Do you have a need for credit in the next 12 months?  For example, buying a car?  Or getting a credit card that might be hard to be approved for?

 

What is the age of your oldest account?  (Open or closed)

Message 4 of 10
Anonymous
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Re: Secured loan

I might need to buy a car or apply for a line of credit within the next 12 months.

My oldest account 5 years and 3 months
Average age 2 years and 2 months
Message 5 of 10
Anonymous
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Re: Secured loan

Oldest account 5 years 3 months
I might need to buy a car or apply for a line of credit
Message 6 of 10
Anonymous
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Re: Secured loan

You will get the most FICO scoring points by paying it down to under 8.99%.  Some lenders, however, will require that you continue to make the same monthly payment.  That will in effect cause you to pay the loan off within four months of the paydown.

 

My advice is to wait on paying it down until two months before you need the scoring points (maybe 2 and 1/2 months).  Then you will get a big boost.  Apply for the car loan -- you will get better terms because of the score boost.  You will lose those points after the new loan appears on your report, but you will have achieved your goal which is to get favorable terms on the car.

Message 7 of 10
Anonymous
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Re: Secured loan

I understand what say but wouldn’t it still be good move to pay it down to 30%, while I am waiting for the right time to pay it down to 8.99% like you suggested?
Message 8 of 10
Anonymous
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Re: Secured loan

Sure.  As long as you are confident that the monthly payments won't cause it to pay off before you need the score boost.

Message 9 of 10
Anonymous
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Re: Secured loan

Thank you very much for your suggestions! I appreciate it.

Happy thanksgiving!
Message 10 of 10
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