I got a secured loan a few months ago. If I pay it off early, like in a month or two, will it get reported to the CRAs the same as if I waited the life of the loan?
I have always heard from potential creditors that a loan should be paid on for at least 1 year if the purpose is to build credit, if you pay it off any sooner, they say it does not show that you can make payments over time.
Re: Re: How Long to Hang On to Secured Loan 3 months doesn't show the ability to make payments over time.
Re: Re: How Long to Hang On to Secured Loan 3 months does not show long positive payment history. what kind of loan is it, and what are the payment terms?
Re: Re: How Long to Hang On to Secured Loan The reps at Golden One CU told me that I should not pay it off until I have at least 6 months of payment history on the loan.
Re: Re: How Long to Hang On to Secured Loan I would say about 4 months and no less than that. I have taking about 5 installment loans out and paid them off in about 4 months, and they have seemed to have helped my scores a quite a bit. I notice the one loan that got paid back less than 2 months showed up as too new to rate. All the others that I took out for 4 months do not have this, they show on my credit report as a normal installments.
Re: Re: Re: How Long to Hang On to Secured Loan It may work score wise, but if you are trying to build a history to take out a real loan, I would advise against that short of a period. Manual review will cause them to turn you down. I know, I took out a loan against my car to build some credit, 9 months later went to a dealership to try to get a new truck, the F&I guy told me it wasn't enough, 9 months did not show my ability to pay over time. He also told me to come back when it hit 1 year then we could talk.
Re: Re: Re: How Long to Hang On to Secured Loan tnobles I am only concern about score at the moment, that is usually what counts anyways. If they want long term payment history, my credit cards and student loan will show them that. So I am not too concern about the short loans I having been taking out. I just view it as adding more goodies to my credit report and none of this hurts it one bit just more positives.
Re: Re: Re: Re: How Long to Hang On to Secured Loan IMHO you would take more of hit for recently opened tradelines and average age of accts. I have gone from 696 to 635 in the last 3 months from new accts alone. But hey, go for it if you think it might help.
Re: Re: Re: Re: How Long to Hang On to Secured Loan So, to wrap this up, would everyone agree that a secured loan should be kept for no less than six months (for quick credit score gain), but keeping it for the life of the loan (usually 12 months) is better?
