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401K loan: Any way I can use this to my advantage?


TxStorm
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I took out a $1500 loan out of my 401K back in January of 2005. Payments were automatically taken out of my check. That loan was paid off in Sept. 2006. In Oct I borrowed $2500 and I am still paying on it every week out of my weekly checks.

Is there any way I can use these loans to show up as "good credit" to lenders or even the credit bureaus being that the payments on these loans are/were made every week without fail?

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I don't think so. It's essentially a secured loan offered at a low rate out of convenience. Maybe employers are offering them so people don't fall into the Payday Loan trap.

They probably only allowed you to borrow about half the total money. The loan agreement likely had a number of safeguards to prevent you from taking it all out on a hardship claim and skipping out on the payments. They could also probably get the money from your employer, and your employer would likely hold your last check and not pay out your vacation time, et al. until the loan was satisfied.

I'm borrowing on a 401K loan myself, and I suspect that unless I tried to skip out on the loan and payments I'll never see it on my CR as a TL.

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Ok had to ask. This is the only real loan I've had in the past 6 years or so. I just got started on Rent Reporters, but it will take them 45 to 60 days to report my rental payments on my CR's from the time I paid for it (last Thursday). It will be awhile before that help gets here.:?

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Howdy Tx,

Payments back to your 401k, normally are not reported to your credit.

Having a 401K when appling for a loan is good, because it is counted as assets.

However if you have an existing loan from your 401K, and it is deducted for your paycheck. When you are trying to get a larger loan (such as a mortgage), this payment would be added to your DTI ratio.

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Howdy Tx,

Payments back to your 401k, normally are not reported to your credit.

Having a 401K when appling for a loan is good, because it is counted as assets.

However if you have an existing loan from your 401K, and it is deducted for your paycheck. When you are trying to get a larger loan (such as a mortgage), this payment would be added to your DTI ratio.

Wow, learned something new today. Thanks for that info. :)

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