Worth it to get a personal loan to help with credit score?

[billyd]

No lates, no issues on CR. My score is around 750, and 800+ on non-FICO scores. Looking to maybe get a house in a year or so. I thought a personal loan (another type of credit) might be helpful on my credit score? I don't really need one, I suppose I could use it to consolidate payments, but not required.

 

My strategy is to get a loan for 36 month and pay it back within 6 months or so. Good idea or no?

Edited December 24, 2021 by billyd

[hdporter]

3 hours ago, billyd said:

No lates, no issues on CR. My score is around 750, and 800+ on non-FICO scores. Looking to maybe get a house in a year or so. I thought a personal loan (another type of credit) might be helpful on my credit score? I don't really need one, I suppose I could use it to consolidate payments, but not required.

 

My strategy is to get a loan for 36 month and pay it back within 6 months or so. Good idea or no?

 

Do you have any open installment loans now?  (Auto, etc.?)  If you do, opening a new account won't help you.

 

If you're contemplating a mortgage down the road, it's important to know where your FICO mortgage scores stand.  I'd advise ordering a single 3-bureau report from myFICO.com.  If your mortgage FICO's are 740+ across the board, I might suggest that you not attempt to fine tune your scores further.  You pretty much qualify for the lowest rates available.

 

FWIW, the loan strategy advocated by others stresses that you should have an open installment on your report for maximum score points.  They take a loan and then repay almost all of the outstanding balance.  They then make nominal payments from thereon out.  This only works if the lender in question recasts the loan (re-amortizes) if you prepay a portion.  (I haven't found it necessary to explore this strategy ... I always seem to have at least one installment in repayment.)

[billyd]

2 hours ago, hdporter said:

 

Do you have any open installment loans now?  (Auto, etc.?)  If you do, opening a new account won't help you.

 

If you're contemplating a mortgage down the road, it's important to know where your FICO mortgage scores stand.  I'd advise ordering a single 3-bureau report from myFICO.com.  If your mortgage FICO's are 740+ across the board, I might suggest that you not attempt to fine tune your scores further.  You pretty much qualify for the lowest rates available.

 

FWIW, the loan strategy advocated by others stresses that you should have an open installment on your report for maximum score points.  They take a loan and then repay almost all of the outstanding balance.  They then make nominal payments from thereon out.  This only works if the lender in question recasts the loan (re-amortizes) if you prepay a portion.  (I haven't found it necessary to explore this strategy ... I always seem to have at least one installment in repayment.)

 

I have student loans and that's it. But I don't have anything else, like a house or car.

[PotO]

No lates, no issues on CR. My score is around 750, and 800+ on non-FICO scores. Looking to maybe get a house in a year or so. I thought a personal loan (another type of credit) might be helpful on my credit score? I don't really need one, I suppose I could use it to consolidate payments, but not required.
 
My strategy is to get a loan for 36 month and pay it back within 6 months or so. Good idea or no?

Non-FICO scores are useless. You need to be looking at your FICO Scores -- especially the FICO versions used in mortgage lending. If those scores are already high enough to obtain the best APR, then I wouldn't worry about it.

The installment loan hack is usually good for an approximately 20 - 30 point increase, but likely not on all FICO versions. I have tried the installment loan hack a number of times when I was bored and got a kick out of seeing my FICO Score at 850 instead of their usual 830. You have to be a bit cautious, though, as not all installment loans work.

Basically you get an installment loan for the maximum term possible and as soon as it is posting on your credit reports you pay it all off except for around $100. Prior to even taking out the loan, ensure that making advance payments are counted as future payments. Otherwise, some loans require a monthly payment even though you have paid made advance payments.

Also, it pays not to be a cheapskate. People have been known to pay off all the loan except for a minimal $20 just to avoid paying about $5 in interest per year only to find themselves FITA. Some banks will automatically forgive low balances. USAA, for example, will forgive loan balances lower than $50. The balance is forgiven, the loan marked as paid in full satisfactorily and any potential FICO Score boost is flushed down the crapper.

There is a pretty lengthy thread around here somewhere that discusses this topic in great detail. I'd suggest reading it thoroughly if you intend to try the installment loan hack.


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[hegemony]

you don't need an installment loan of any kin d to have scores in the 800s. And if you are not looking at MORTGAGE FICOs you are wasting your time assessing the potential impact on your scores.