Leaving the credit game...

[shipo]

...for a year.

Here I am some 13+ months post Chapter 13 discharge, I have three well respected credit cards with a total credit limit of $14,000, with utilization of less than 2%, and as of today I initiated an Secured Share Load with PenFed. The plan for the next year is to sit on the sidelines of the credit game, let all of my hard pulls and new credit lines age out to at least 12 months, and to let my Chapter 13 fall off my record. I figure by next May my credit picture should look pretty good; good enough to start shopping for a mortgage for my wife and me.

The next year should be interesting, as of today both my Vantage scores are hovering just over 700 and my FICO 8 Mortgage scores range between 650 and 690. I'm hoping for at least 750 for all of them this time next year.

[justbroke]

Gardening is a thing. Good luck!

I think that you are in perfect shape to hit all 740s next year so long as the inquiries are nil (hence gardening), and the utilization stays low.

[Carmella]

What is an Secured Share Load with PenFed?

Sounds like you are on the way to get the mortgage you desire!

[sophieanne]

I have the same question as Carmella. I’m happy to announce I have a couple credit cards..I only had 2-3% utilization. I went the last month with zero useage. I was shocked when the 3 credit reporting agencies increased my score to 810. I almost fell over..lol. Good luck with your goal shipo.

[justbroke]

I believe it was a typo and that it's a Share Secured Loan. Credit Unions (CUs) offer secured loans against the balance in the member's share (savings) account. This allows a person to establish installment history when it's absent on the credit report. It has been known to add 40-60 points to a score since the FICO score likes to see some sort of installment history (cars, mortgages, closed-ended loans, consolidation loans... mostly anything that is not revolving).

[Zombie13]

shipo good luck!

[shipo]

Carmella and sophieanne, a Secure Share Loan (aka. SSL) is a loan which is essentially the Personal Loan version of a Secured Credit Card.

The avenue to the best FICO scores are achieved by what I call the "FICO game"; a game which is played by assembling the correct array of credit instruments and using then in a certain manner which maximizes one's FICO scores in the shortest period of time. What I've gleaned from this site and others on playing the game is as follows:

• One needs at least three "revolvers", basically three, what I call "real" credit cards, basically a VISA, MasterCard, or AMEX.
  • Keep the individual card utilization and your overall utilization under 9%, some folks say you should keep all of your cards at zero except one (aka. AZEO), and the one with a balance under 9% utilization.
• In addition to the three revolvers, one also needs a personal loan, secured or otherwise.
  • With a secured loan, the game one plays is to quickly pay it down to under 9%; this has the effect of pushing out your next payment for months, or even years into the future, but yet, the loan still reports as open and current on your credit reports.

My understanding is most folks immediately pay off at least 91% and then let it ride. In my case, I opted for a $3,000 loan (secured by a $3,000 security deposit) with a 36-month payment plan. Since I don't need maximum FICO scores until April of 2022, I'm thinking to simply stash the three-grand in my Roth IRA and then pay $500 for the next 5-months, then $75 for the 3-months following that period, and because interest will still accrue, throw an occasional payment to the loan to make sure it stays below 9%. Another cool thing about SSLs is, by virtue of the fact they are "secured", the interest rate is super low, in the case of PenFed, my loan came out at a 2.05% APR. Not too shabby.

[shipo]

I believe it was a typo and that it's a Share Secured Loan. Credit Unions (CUs) offer secured loans against the balance in the member's share (savings) account. This allows a person to establish installment history when it's absent on the credit report. It has been known to add 40-60 points to a score since the FICO score likes to see some sort of installment history (cars, mortgages, closed-ended loans, consolidation loans... mostly anything that is not revolving).

Could be, I was trying to remember what the PenFed agent, I "thought" she said, "Secured Share Loan", but you're probably correct in that it is actually a, "Share Secured Loan".

In my case, since I really like my old car and have no plans on replacing it with something newer any time soon, I have no other loans beyond the three credit cards; hence the need for the SSL.

[justbroke]

shipo you had a typo in your original post which is what, I believe, confused everyone. You wrote "Secured Share Load". Everyone wants to know what that is!

[shipo]

LOL, sorry, totally didn't catch that.

[Carmella]

Not that I need stellar credit because I don't think I will be in the market for anything when BK is done, well maybe a car.

We have a home equity line of credit. I had hoped to be able to put extra payments on it and pay it off so when BK is done the house will be free and clear. But since Covid happened we had absorbed the money that use to be our house payment into our regular budget. I got called to start my second job up again which will bring more money in the household.

Would it be better not to strive to pay it in full, which may not be possible anyway, but to get it close to 9% and then just pay minimum payments until it's paid off in order to help our credit score?

We might be pursuing a car loan. It was too overwhelming so we are still car sharing, but my other thought with second job coming back we might be able to go through the legal process to get another car loan so maybe I don't need to worry about an installment type loan post discharge.

[shipo]

Would it be better not to strive to pay it in full, which may not be possible anyway, but to get it close to 9% and then just pay minimum payments until it's paid off in order to help our credit score?

I am far from an expert regarding the FICO Game, but to answer your question as well as I am able, yes, paying your HELOC down to 8.9% or lower and then letting it ride will boost your FICO scores a few points, however, paying it off will definitely drop at least some of them, maybe by as much as 20 points.

We might be pursuing a car loan. It was too overwhelming so we are still car sharing, but my other thought with second job coming back we might be able to go through the legal process to get another car loan so maybe I don't need to worry about an installment type loan post discharge.

With this in mind, I believe the best advice is to obtain the car loan and then pay off the HELOC; after that you should be good to go pretty much regardless of whether you take a point hit or not.