Hey all, o.k here it goes i HAD an equifax fico score of 529 ( i started out with 480 2 months ago). Well anyway i needed some good credit so i went and took out an 1,500 secured loan from my bank. The way the guy explained it i thought it would be listed as unseured, but i guess i misunderstood. Well anyway it just hit my reports and is listed as secured. is that really bad? for some reason my score tanked from 529 to 507 because of this. I really thought i was doing something good, but i think i messed up. Any help or advice from you guys would be great. thanks a bunch
Your score probably "tanked" is because it's a brand new account. Once you start making timely monthly payments, are never late, the score will rise and keep on climbing. Secured vs unsecured has no bearing at all.
You have two factors here which pulled your score down a bit; 1) The new account, which lowes your overall "age" of accounts, and 2) The loan is at 100% leveraged right now, or its high limit. Being secured makes no difference to the loan balance. As previously stated, paying on time will increase your score over time. In the long run, this was a good move to help your credit.
I think that Greg and Biz hit the nail on the head. It's not the secured part as much as the new account and the fact that the loan has a high utilization. As with most things with FICO, it will take time for your scores to rebound. How many accounts do you have, and how old are they? The longer your history and the more accounts you have, the less a new account impacts. And the more available credit with low utilization you have, the lower your overall utilization becomes. The reason Enigma asked how it was reporting is that only revolving accounts should have much impact on the utilization, but if they report it as revolving with almost 100% utilization and you don't have much else on your report, that will kill you.
It is reporting as an installment loan, my first payment is not due until jan 10 I have 10 accounts with experian 5 are good paid accounts oldest is from 2005, 1 is an auto charge off (i was a co-signer for someone back in 05) and 4 collections, which i sent PFD to last week so we will see what happens. I just never thought with my score being so low that my fico would take a hit.
As previously stated, the account is doing nothing and actually hurting you. It will continue to do so until it reaches at least the six month mark and even then, it will have little impact insofar as it is not providing you any avaliable credit. Only a revolving account will do that. You need to add aged, revolving lines in order to significantly increase your scores. I don't know if time is of the essence for you but, nonetheless, that is how it is done. Well, that and removing as much derogatory information as possible.