How Much Will a Secured Loan Improve My Credit Score

L

Laura clark

Member
I was scrolling through YouTube recently and came across a video where someone explained how they boosted their credit by using secured loans in a specific way. According to them, they took out a $7,000 secured loan for about two years, then paid back 99% of it within just two days. They repeated this process twice a month with a smaller $2,000 balance and claimed it helped raise their score by around 20 points.

On the surface, this kind of makes sense you’re basically borrowing against your own money and then paying it back almost immediately. That way, the credit report shows a loan nearly paid off, which looks good, and you also get your funds back after repayment.

I’ve been considering trying something similar, but I’m just an average working person without much financial expertise, so I’m cautious. Let’s say instead of $7,000, someone takes out a smaller loan maybe $1,000 to $2,000 for a term of 1–2 years, with a finance charge of about $13–$20 and an APR around 2%. The monthly payments would be roughly $41–$85. If they make on-time payments but pay the loan off quickly anywhere between two days to a few months would this actually help build their credit profile and strengthen their relationship with the credit union? Or could it end up hurting them in the long run?
 
I’ve actually done something like this with a $1,500 secured loan through my credit union. It definitely helped me diversify my credit profile because I only had credit cards before. My score went up about 15 points after 6 months of steady payments. The key though is time. Credit scoring models reward consistent, on-time payments, not just quick payoff tricks. Paying it back in two days won’t give you the same aging effect.
 
Tbh, it sounds like YouTube credit hacks again. FICO isn’t stupid. If everyone could borrow $7k for 48 hours and magically get 20 points, the whole system would break. What does work is credit mix and payment history. If you’re just starting, a secured loan can help. But don’t expect miracles overnight.......credit building is a marathon.
 
I did a credit builder loan at my local bank. Basically, they locked up $500 in a savings account, and I paid it down monthly over 12 months. Cost me maybe $10 in total fees. The score bump was like 25–30 points, but more importantly, it made my credit mix healthier. So yeah, small loans can help, but I wouldn’t overcomplicate it.
 
The video you saw might’ve been talking about “share secured loans.” Credit unions love those because they’re low risk. But the whole pay it off in two days strategy doesn’t really trick the system. Lenders report monthly, so your credit file probably won’t even see that micro-payment activity. At best, you’ll just show a new tradeline.
 
I think the person in the video was exaggerating. Scoring models don’t react instantly like that. A 20-point bump could have been from other factors: maybe a card balance updated lower, or a hard inquiry aged past 12 months. I’d be cautious with repeating short-term loans because lenders might see that as gaming the system.
 
I tried this exact method back in 2021 when I was desperate to raise my score for an apartment. Did a $1,000 secured loan, paid 95% of it off immediately, and left $50 to autopay monthly. My score only moved like 5–7 points. Honestly, credit cards with low utilization gave me way bigger jumps.
 
If you’re asking about $13–$20 in finance charges…that’s honestly dirt cheap for building credit. Think of it like a gym membership for your financial profile. Even if the score doesn’t shoot up, you’re still creating a positive history that sticks for years. The cost-benefit ratio is pretty good.
 
Lol, sounds like that YouTuber found the Konami Code for FICO. Up, Up, Down, Down, $7,000, Payback. Jokes aside, paying things off fast isn’t what matters. Length of loan, consistent payments, and mix of credit are the true cheat codes. If quick payoffs worked, every lender would be broke.
 
Something to keep in mind: every time you open a loan, you get a hard inquiry. That can drop your score by 5–10 points short term. So if you’re doing this twice a month like the video said, you’re probably hurting yourself more than helping. The math doesn’t add up.
 
My sister works at a credit union, and she says they actually encourage secured loans for young people. It builds loyalty, shows repayment ability, and creates a relationship with the bank. Paying it off super fast? Meh, not impressive to them. What impresses them is steady, reliable monthly payments.
 
Yeah but don’t forget about opportunity cost. You lock up $1,000–$2,000 in a secured loan just to maybe gain a few points. That’s money you could use to pay down a high-interest card instead, which would give you a much bigger score boost and save you interest. Secured loans are useful, but not always the best bang for your buck.
 
I’ve heard of people doing self lender accounts (apps that basically mimic credit builder loans). They pay like $25 a month, and after a year they get their money back plus a new tradeline. That’s honestly less stressful than moving thousands around in two-day cycles like your YouTuber guy did.
 
I think it depends on what your credit file looks like now. If you’ve got no loans at all, adding one can help diversify your mix and give you a few points. But if you already have auto loans or student loans, one more secured loan won’t change much. It’s not a magic wand.
 
You know what’s funny? Some people chase tiny score gains when the bigger picture is just: pay on time, keep utilization low, don’t go inquiry-crazy. Those three rules alone do 90% of the work. Everything else (like these loan hacks) are just sprinkles.
 
Not financial advice, but I’d say if you’re gonna do it, keep it simple. Take a $500–$1,000 loan, pay it down over 6–12 months, and let it age on your report. That way you don’t stress about gaming the system, and you still end up with positive history.
 
Honestly, lenders aren’t blind. If they see you take out a loan and immediately pay it off, they might not be impressed. They’re looking at risk behavior. Real responsible people make steady payments, not quick in-and-out cash flips. It could even raise eyebrows if you do it too often.
 
I think your best bet is to ask your credit union directly. Some CUs report loans differently. Some might only report monthly balances, others might show quick payoffs. If their reporting cycle doesn’t catch your two-day loan, it’s basically invisible to the bureaus.
 
I’d be careful with stacking multiple loans. Even if they’re secured, too many accounts opened in a short time can look like you’re desperate for credit. That can lower your score temporarily, and lenders might deny you for bigger stuff like auto loans.
 
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