Wisdom of unnecessary loans to improve file.

Looking for commentary of the wisdom of taking unnecessary loans for the purpose of better rates on mortgages or other functionally necessary loans down the line.

Example:
Thin file --- no open loans --- one A/U card
FICO 8 of 740
Wish to just establish some history now to have on file for later when important.

Willing to put the next Appliance or other $1-2k household purchase on a store card like Lowes/Synchrony..... OR make some other purchase that I would otherwise pay cash for, and pay off in a 1-6 month time.

My ONLY justification for doing so is that paying even $500 in unnecessary interest on smaller loan or account would hypothetically reduce interest down the road by a reduced mortgage rate(even a small difference would add up).

Open to other strategies AND all input welcome.

I'm a huge proponent of getting experience with multiple tradelines in advance of a loan of any kind, as long as you can push off that loan for at least a year to let your scores recover (the older score models used for mortgages and sometimes vehicle loans or just CU loans are quite sensitive to seeking). If you're wanting some installment loan experience, are you by chance eligible for Navy Federal? They have a shares secured loan product that lets you pay off the bulk of the loan and it pushes your next payment due date out by that amount of months worth of payments. It's a little score trick that can give you 20-30 points across your FICOs for having an installment loan that's almost paid off. There aren't a lot of options for this type of loan though and once you pay it off, or get another installment loan with a high balance, the benefit goes with it. What I did was take $3100 and put it in my NFCU savings account. I called customer service and asked to take out shares secured loan against that money for 5 years. Then I paid it down to 8.9% ($275), they returned the excess money in my savings a few days later, and I've been paying $3 a month from my savings every month since. The score lift was beautiful. PenFed has been said to do share secured loans too but they don't advertise it on the website. https://ficoforums.myfico.com/t5/Person ... ue#M240452 Store card accounts would be revolving credit and I wouldn't really recommend them unless you plan to use them long term as store cards affect your insurance scores negatively. Just get a couple regular credit cards with nice sign up bonuses if you want to thicken your file a bit.

Had no idea about the store card ---> insurance impact. Total deal breaker, all else equal. My CU rep seems to completely not understand the Share Loan method discussed here often. I MAY have over complicated my inquiry, but seems pretty simple.

I truly have no immediate need for any credit product, thus it SEEMED like a good time to exercise some options while NOT under duress.

Kreditory wrote: ↑Sun Jan 29, 2023 6:57 pm Had no idea about the store card ---> insurance impact. Total deal breaker, all else equal. My CU rep seems to completely not understand the Share Loan method discussed here often. I MAY have over complicated my inquiry, but seems pretty simple. I truly have no immediate need for any credit product, thus it SEEMED like a good time to exercise some options while NOT under duress.

That's always the best time for sure.

Kreditory wrote: ↑Sun Jan 29, 2023 10:52 am Example: Thin file --- no open loans --- one A/U card FICO 8 of 740

Is this your actual profile? You have no cards / revolving accounts of your own? ETA. I looked back at your other posts to refresh my memory. I would recommend finding your Mortgage Scores too. Free mortgage scores: EX2, TU4, EQ5

Kreditory wrote: ↑Sun Jan 29, 2023 10:52 am Looking for commentary of the wisdom of taking unnecessary loans for the purpose of better rates on mortgages or other functionally necessary loans down the line.

The best thing you could do right now is get a $500 share secured loan (creditbuilder loan at some CUs) AND a revolving bankcard account of your own, no matter how low the initial limit might be. Stay away from retail/store cards unless it's something like a L.L. Bean Mastercard or Citi Costco Visa that you can use anywhere. (They're not store cards if attached to a payment network like MC/Visa, but some people reading this later might think they are.) I paid a total of $8 in interest over 12 months of payments on a $500 SSL, and it was totally worth it just to get a loan tradeline on my file. The huge score boost in the final month, when the loan had 8.47% remaining, also helped a whole lot when getting my first 2 bankcards. With a mortgage, someone is going to do a manual review of your credit file, and the SSL Boost Trick doesn't affect mortgage scores anyway. They're going to be looking for a long length-of-payment-history on many tradelines - at least 3 for good measure. So stay away from AZEO and let things report before paying-to-zero. They need to see usage (borrowing) followed by payments.

All Zero,

Yes. My Profile. Slightly odd due to it reporting as 5-6 years old on Experian but 20plus on Equifqx.

I paid of a mortgage is 2001/2 and have not had any credit since. The mortgage no longer shows on any report.

My EX-Fico 8 has been between 740-43 and TU Vantage between 788-90 for appx 2 years.

Tell me if that is what you were asking.

Cassie,

I absolutely was taking/not second guessing your earlier advice. My CU "banker" just had no clue what I was asking, so I sort of backed off of it.

Re: bank cards vs store, one of the motorcycle companies has a card that operates on the visa network. Not likely a true Visa, but for profile it may report that way. <------ A toy that I could purchase strategically but definitely would only if it reports right.

Side note. Found a few rural-ag land lenders that MAY also be an option, though relative closing costs make that more expensive than a high rate card.

Cassie wrote: ↑Mon Jan 30, 2023 10:52 pm

Kreditory wrote: ↑Sun Jan 29, 2023 10:52 am Looking for commentary of the wisdom of taking unnecessary loans for the purpose of better rates on mortgages or other functionally necessary loans down the line.

The best thing you could do right now is get a $500 share secured loan (creditbuilder loan at some CUs) AND a revolving bankcard account of your own, no matter how low the initial limit might be. Stay away from retail/store cards unless it's something like a L.L. Bean Mastercard or Citi Costco Visa that you can use anywhere. (They're not store cards if attached to a payment network like MC/Visa, but some people reading this later might think they are.) I paid a total of $8 in interest over 12 months of payments on a $500 SSL, and it was totally worth it just to get a loan tradeline on my file. The huge score boost in the final month, when the loan had 8.47% remaining, also helped a whole lot when getting my first 2 bankcards. With a mortgage, someone is going to do a manual review of your credit file, and the SSL Boost Trick doesn't affect mortgage scores anyway. They're going to be looking for a long length-of-payment-history on many tradelines - at least 3 for good measure. So stay away from AZEO and let things report before paying-to-zero. They need to see usage (borrowing) followed by payments.

Every account that I have had in last 20 years was an AU. My mortgage and last financed car were over 20. Somebody told me that those 100% won't show or help....which I get. That is mostly my reason for looking to some small hacks in advance of needing real borrowing ability.

Kreditory wrote: ↑Tue Jan 31, 2023 4:23 pm My CU "banker" just had no clue what I was asking, so I sort of backed off of it.

That's really surprising. Some of them offer Share Secured Loans using a different name, such as 'Credit Builder Loan'.

Re: bank cards vs store, one of the motorcycle companies has a card that operates on the visa network. Not likely a true Visa, but for profile it may report that way. <------ A toy that I could purchase strategically but definitely would only if it reports right.

If that card has VISA on the front it will be treated as a regular bankcard by FICO score models. The issuer will show as whatever bank they're using. Likewise for Mastercard, which is also popular with places like that.

Honda Powersports is the only one that I know of, and not positive. I need to contact them, but as I am finding, few seem to understand their own industry.

I did auto finance for a while and I was shocked at how little the relevant players really knew. That they hired me and handed me certain resources and responsibilities was mind blowing.