Would I benefit from an SSL?

[dynamicvb]

I've just recently started my rebuild and like the idea of an SSL that I've seen mentioned around here. While you are paying interest its really like you are borrowing and saving with the same money, just paying a little extra in interest with what you pay versus what you earn on the CD. There is a credit union in my area who offers this plan. I don't know the interest yet, but I do qualify for the credit union and I have money to put in an account or CD. With the thought, once I get their check, I'll just put it back in my savings account where I take the money to put into the CD. I don't think I want to push it out 5 years and was thinking of a 12-month SSL, or perhaps a couple. Not sure if that would help or hurt.

I don't have a thin file, but stuff is starting to age off. I discharged a chap13 about a year ago and haven't done any credit since then. I did just get a CC for the first time in years and I'm hoping for a boost after it starts reporting. 

My AAoA's is either 11 or 13 years and the only thing open at the moment on my file is 3 student loans. There are 11 or 13 closed accounts all paid. And one collection for 45 measly bucks that I swear they never sent me a bill on. It's been paid and I'm considering sending them a GW letter in hopes to get it removed.

One SL is at $51K with a whopping -66 percent utilization( that's what I get for letting it sit for so long in deferment) 

2nd SL $3255 at 35% utilization

3rd SL is 2532 at 39% utilization. 

I have the credit card and it has not reported yet and my plan with it is to keep the utilization about 8.9% and pay off every month.

Scores are currently all around +/-620 on fico 8. I know the new credit card will lower my AAoA once it reports and I'm concerned perhaps opening another tradeline so soon may hurt me even more. I really want to get back into the 700s as soon as possible, so I'm trying to make good decisions, but since I have not used any credit for over 6 years, the score keeps going down and the only way it's going up is if I use some.

I could also get another secured credit card instead of the SSL or I could do both.

Considering the above information, what would you do? Do you think this would be a good strategy for possibly pushing my scores back up by the end of the year?

[Anonymous]

The Share Secured Loan Technique only works for people who currently have no open loans (or who will very soon have no open loans, due to an impending payoff).

You have three loans, none of which will be paid off soon.  So you can forget about the SSLT.

[dynamicvb]

Thanks CreditGuy. so it sounds like perhaps I should do another credit card or two and do the AZEO method instead? My wife had set me as an AU on a card she recently got and it reported to EX a little while ago for a 17 point bump, so that's cool :-)

Does the AZEO method help with you as an authorized user?

Perhaps when my new card reports in a few days, I will get another bump.

[Anonymous]

AZEO is of no help as a long term strategy.  It doesn't help a person build his score, i.e. gradually increase it over time.  But it can be useful in the month before you apply for credit.

This is being discussed today:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/AZEO-Is-It-Really-Worth-The-Effort/td-p/...

[dynamicvb]

Thanks for the link, so it appears there is some confusion around the forum about the exact benefit of the AZEO method as it seems to only be a short term boost. 

[Anonymous]

The veterans of this site have always been clear about how AZEO works.  It's just a simple acronym to aid people who are preparing for an important loan app and assumes that the person needs every conceivable extra point; it's also designed to work across every existing FICO model.  We try to remind people in every discussion we see of it that AZEO's benefit can be fully obtained in the 40 days before the app in question, and this in turn follows from the deeper fact that FICO treats Amounts Owed on accounts as a snapshot in time -- FICO does not look back and see what your balances were each month for a long period.  The only thing that matters is what your balances were at the instant the credit report was pulled and the score calculated.

Unfortunately the AZEO technique has become a bit of a meme repeated without understanding the deeper issues of how FICO works, which can lead to newcomers into thinking that it will help them build a score over an extended period of time.  This is not the case, as you now realize.

What many veterans of this site do is just use whatever cards make sense and they don't care much whether for five months in a row they might have several cards reporting a balance.  As long as they are keeping their total utilization under 29% and each card individually under 89%, that should be fine for keeping creditors from getting worried.