To close or not to close, SelfLender

Anonymous · ‎05-07-2018

On the road to reestablishing my credit, I used Self Lender as my installment loan to make sure I had a good credit mix. 6 months later my scores are trending upward and I was able to get a car loan thru Bethpage. Since multiple installment loans do not carry more weight, should I just close the SelfLender account or take it the entire 12 months?

**That $50/month to SelfLender can go to the car loan and it would save me some interest and have the car paid off 8 months earlier.

Any input would be greatly appreciated.

Ultralow · ‎05-07-2018

Off topic what car did you get and where did you start on your credit rebuild

4/30/18
Fico 8 scores EX(none) TU (none) EP 582

6/21/18 fico 8 EX (none) TU (none) EP 620

Anonymous · ‎05-07-2018

Sounds like a very reasonable plan.

BTW, strictly speaking, the reason that closing the personal loan is ok is not exactly because you already have another loan. It's because the other loan is huge by comparison, and therefore paying off the little SL loan won't alter your intallment utilization.

Suppose, however, that the loan sizes were reversed. Loan A is for 50k and you owe 4k on it. Loan B is for $500 and you owe $480 on it. It would be a big mistake to think that paying off Loan A is fine because you already have another loan. You will lose about 30 points on your score if you do that, because you'll go from having open debt on which you owe < 9% to open debt on which you owe > 91%.

We have seen that happen many times here on the forum, typically when a person pays off his mortgage and has (say) a new car.

Anonymous · ‎05-07-2018

wrote:
Sounds like a very reasonable plan.

BTW, strictly speaking, the reason that closing the personal loan is ok is not exactly because you already have another loan. It's because the other loan is huge by comparison, and therefore paying off the little SL loan won't alter your intallment utilization.

Suppose, however, that the loan sizes were reversed. Loan A is for 50k and you owe 4k on it. Loan B is for $500 and you owe $480 on it. It would be a big mistake to think that paying off Loan A is fine because you already have another loan. You will lose about 30 points on your score if you do that, because you'll go from having open debt on which you owe < 9% to open debt on which you owe > 91%.

We have seen that happen many times here on the forum, typically when a person pays off his mortgage and has (say) a new car.

Thanks for the info, I will be closing the Self Lender today.

Anonymous · ‎05-07-2018

@Ultralow wrote:
Off topic what car did you get and where did you start on your credit rebuild

Started in October, I literally did not have a credit score. Long story short; abused credit in college, graduated got a good job paid every1 back in full, swore off credit as evil (because I was irresposible SMH!), lived an all cash life for 14years, stumbled upon this board and said let me get back in the game.

2013 BMW 750LI