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I want to enhance my credit with share secured loans (I'm a member of a credit union). All else being equal, will paying off 5 $200 loans give my credit score more of a boost than one $1000 loan?

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Having worked at a credit union, I have some input:

The things that have the greatest impact on your credit score are:

What is your oldest line of credit, and how old is it? The older a line of credit (think your first Credit Card still open), the more lift to your score.

What is your total debt to available credit when the report is pulled? The more of your 'credit' that you have utilized, and the less 'credit' you have left, the lower your score.

Are you "paying as agreed" on all of your lines? Making payments past due definitely hurts your score, as it indicates a difficulty/inability to replay, meaning you're more risky to an institution.

How many credit "inquiries" have you had recently? Have you been looking for credit at multiple locations and frequently? This can be a red flag to a lender.

How many new accounts have you open, and how many do you currently have open? Too many new, and too many accounts in general may indicate that you rely heavily on credit v. cash/assets. This also indicates risk.

I'd advise you to open just ONE loan, and pay it on the schedule. Otherwise, you'd be opening several new accounts simultaneously, which is highly unusual for these purposes, especially if they are all of the same type.

It will take time, but your credit will build. Right now, if you have new/no credit, they have nothing to base their decision on. Once they can see your history of repayment, you look like more of a 'safe decision' in terms of lending. That's really what credit score is all about, IMO.

Secondly, I'd highly advise a line of credit v. a personal/installment loan. A line of credit may remain open indefinitely, and you can have the credit line increased. Both of those things are HUGELY positive on your credit score. It shows you can utilize credit responsibly and repay what you take as a loan.

Also, keep in mind that there are 3 credit reporting agencies, all with their own proprietary formulas and methods, and I believe at last check, only 2 have published their formula's publicly.

  • If you happen to know, would you mind defining how long "recently" is for recent inquiries, and also "new" for new accounts? – TTT Aug 20 '15 at 19:40
  • I would try to not open more than 1 account every 6mo, and try to have fewer than 10 lines of credit, loans, etc. at any one time. Also, anything more than 1-2 inquiries every 4-5 months will definitely have a negative affect on your credit score. Of course this is generalizing, and assuming typical size loans. – BrownRedHawk Aug 20 '15 at 19:54

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