Hello folks. Following some of the recent advice I have seen on the board, I have decided to obtain two secured loans from my credit union in order to have two positive accounts report to the bureaus. I have $5K to use to do this, and with these funds, I can obtain two loans for $5K each (or some lesser amount). My question is whether I should get both loans in the amount of $5K each, or maybe one for $5k and the other for less? I will be paying these loans over at least 12 months. What would be the best approach here? I want to get the most positive effect on my credit that I can from these loans. Any thoughts on what I should do here?
I hope what I am about to say helps. I got a $1K 12 month secured credit union loan. I paid it off and it looks great on all 3 credit reports. When I took the loan out my intent was to build up my long term credit. I did not care at all about the short term effect on my FICO score. No one knows how FICO really works but there is anecdotal evidence that your FICO score will temporarily drop when the loans are in process and not yet paid off. On a second topic, if you take out the loan don't pay the loan off to early as there is some additional anecdotal evidence that Equifax will not convert the loan from "I" to "I1" status. Somewhere I ran acrosscomments that you need to pay at least 9 of 12 payments in order to get "I1" status. I have no opinion about the amount or number of your loans. I feel I did the right thing getting my secured loan. The loan will stay on the CRA reports for 10 years. Good luck!
Thanks, Jim. I've actually had a couple of secured loans in the past from this same credit union, and they are still reporting positively on my reports. However, since those loans were about 3 years ago and were only for $500 each, and I now have the opportunity to do a couple much larger loans, I am going to do it again. It does look great on your reports, you're right! I figure that while I am trying to have the negatives on my reports deleted, it doesn't hurt to flood my report with good stuff. The best part is that the credit union won't do an inquiry to establish the loans, since they are secured loans and they are looking to the collateral for ultimate repayment. So, it's a win-win situation, I think. Thanks for replying!
I agree chriscraft!! A lot of people here get caught up in the FICO score issue prematurely. I am 26 months post Chap 7 BK discharge. Only 2 retail accounts survived my BK. I have added: 1 auto loan 4 visa cards Nordstrom Target and of course the secured crdit union loan since then. I use all the accounts every month. In 2 years, I will scale reduce my accounts to maximize FICO but for now I am building credit history - just like you. At the same time, I am doing credit restoration.
Re: I agree Jim!! Jim, sounds like you and I are on the same wavelength. While I have been having some success having negatives deleted, it just occurred to me last week that I am wasting time by not have positives added to my reports and start the clock running on my R1 accounts. It dawned on me that getting rid of negatives is only half the job. So, like you, I am working on this task from both sides - deleting negatives and building positives. As to the FICO score effects, I have no idea how it works in this situation. It just seems to me that a report with 10 positives and 4 negatives is better than one with 5 positives and 4 negatives. Make sense? Maybe initially it doesn't help your scores, but in the long run it has to help somewhat. Anyways, good luck with your efforts! Keep us apprised.
balance Chriscraft, if you don't have any bankcards, you might want to get one secured bankcard and one secured loan. That way you'll add an I1 and an R1 to your report.
1 more item Chriscraft and shyguy - your cu's are great about the inquiry's. I got stuck with the hard inquiry.
