Spent 2 years building credit the hard way before a banker set me straight

I had been paying off a secured card every month and waiting for my score to move. After two years I was stuck around 680 and couldn't figure out why. Then a loan officer at a local credit union in Tulsa asked if I had any installment loans on my report. I said no and he explained that my thin file was actually hurting me because I only had revolving credit. Got a small personal loan for $1,500 and within 4 months my score jumped 45 points. Has anyone else had success adding a mix of loan types to their credit mix?

3 comments

3 Comments

barbara_jenkins6610d ago

Cut the drama, it's just a small loan not a magic trick. Your score probably went up because you added a new account and paid on time, not because you suddenly unlocked some secret credit formula.

wade_kelly7710d ago

Read somewhere that the credit scoring models actually look for a mix of account types, not just how many cards you have. Heard this from a guy who worked at a car dealership - said people with only credit cards often get stuck because the system sees them as risky since they don't have experience with bigger fixed payments. Your experiment matches up with what I've seen other people post about on finance forums too.

keith27410d ago

Wait, doesn't the dealer guy basically just confirm what Barbara said though? Adding a new account type does show you can handle different payments, but it's still just making on time payments that bumps your score. It's not like the system has some hidden secret rule about having a loan from a specific bank or something. Most people I know just got one small loan, paid it off fast, and saw a similar jump. It ain't magic, it's just showing you can keep up with a fixed bill.