Tips on Credit Repair

Yes, it is a powerful technique but it has been around since at least 1937 or maybe even longer. Most banks are aware of this technique and because most people who use that technique pay the loan off in 12 weeks instead of the 12 months originally agreed to they make almost no money for their time and trouble so won't many won't go for it on an amount of money so small as the $400 suggested on that site.

The technique isn't fully explained on that site either. So a better way is to use a greater amount of money if at all possible. Maybe something of at least $500 or more. $500 is only going to be in the range of what the sub prime credit cards will open a new account for if that.

Some banks will make the loans for about 5 percent interest because it is a secured account and some will want more. Many will pull a credit report before making the loan and if they find that you don't meet their credit requirements won't make the loan even if it is a secured account.

So you need to investigate the banks by phone before you get committed into doing it. Will they pull a credit report? If so what would the minimum score need to be to make the loan? What would the interest rate be for the 1 year loan? Would the bank demand that the loan be paid in full before releasing some of the funds?

Things like that. If you miss a trick or a turn you will be in an awfully bad position if you don't have the full amount in reserve so you can pay the 3 loans if the banks won't release funds early.

Yes, it works but only if you get the right banks and know all the little tricks you need to make it work

Like most web sites, they aren't telling you the full story of how their ideas work.

 

Seems you may not quite understand how it works yet. You start a savings account for the amount desired and borrow it all back. Or at least nearly. Some banks won't loan it all back. Some will only loan about 90 percent of what you deposited. But you take the money from the first loan and go to the second bank, repeat the process and do it a 3rd time. At the end of the three banks you end up with your original amount or nearly so.

 

Remember, this is a traditional way to "establish" credit, not jump your scores. By opening accounts/taking secured loans, you are establishing credit. But, for your credit score, you are opening "new" accounts, which lowers the overall age of your accounts. The more you open, the more the effect.

In the longer run, you will help your credit report and scores, but in the immediate time frame, you will likely see a drop in your scores.

Be aware that the actual process is not as easy as it sounds. The banks will look at the loan apart from your compensating balance. You may have to agree to set up the deposits into an account that you cannot access. The banks run the risk of someone pulling out the money from a savings account and defaulting on the loan.

 

Yes, the account will still be considered a newer account. The "average age" of an account/tradeline is about seven years. The "average newest" account is about 15 months. So, it will take a few years for the tradeline to become "seasoned".

The savings account verifies you have the assets to borrow against, but placing the money in a traditional savings account does not guarantee the loan. Per deposit law, you could withdraw the money, thereby taking away the collateral for the loan. There must be a full "pledge" of the deposited funds.

 

Again, this is a method to "establish" some credit, in the longer run these loans will help your credit score. But, taking out 3-4 "loans" at once will pull your credit score down at first.

This method wa used before secured credit cards were around (which is basically the same thing), and this method was popular before credit cards were common.

I think you would be better of trying for a secured credit card, you will be able to avoid some of the interest this way. But, if you want to pursue this method, do only one loan at a time. Do it for the long range help to your credit reports, and know that your score will dip a bit for the first few months until it is paid.

Again, this method does work, but not to the degree promoted here. Credit is about being able to manage finances, there are no shortcuts.

 

I have not been on this site for two years. I have a question, can acounts in dispute status be seen if your credit is pulled?

 

Accounts in dispute are "required" to be marked "In Dispute", and they are visible to a creditor, but should be marked "In Dispute". As for your credit score, there is much mystery and debate, the account is not supposed to be calculated into your score, but.....this one is difficult to prove.

 

Yes, it will take a few years for it to become a seasoned tradeline but the actual first impact will come much quicker. You will see the first bounce in a year or less. If you have any negatives on your credit report they are going to either have to fall off or be disputed off first in order to show any increase
worth noting. But remember that although you take out the loans for 12 months you will actually be paying them off in 12 weeks. That cuts the interest down to only a few bucks. Even though you have to pay 15 or 20 percent interest, that will be a very small amount when you only let the loans run for 12 weeks. Total interest cost for all 3 loans might be as high as $20 to $25. Those kinds of secured loans usually come in at less then 10% interest however. And yes, you do have to pledge the savings accounts so you can't draw any money out until the loans are paid off. But if you use the money from making the loans to pay the first 3 installments then go back and ask the banks to release funds up to the amount you have paid in they will usually do that. Then you have the funds to make the next 3 payments after which time you repeat the process and when you get done you will have your original investment back minus any interest costs.

That's right, can't hurt you any. Taking out only one loan won't make all that much impact on your scores but 3 paid off bank loans looks fairly impressive on your history.

That was the wrong thing to do. Never use a bank you are currently doing business with.

If they still go by the credit score and you know in advance that you
can't qualify for a bank loan based on credit score then you need to look for the door you came in by. Also I said that you should call the banks first, not go visit them. Let your fingers do the walking.

Another mistake. Don't tell them anything about wanting to do it to repair your credit. If the person you talk to never heard of the method and learns that the sole purpose for getting the loan is to build your credit they will probably think it is some kind of internet scam and are likely to turn you down.

Someone once said that you should never attempt to educate the other man.
What you want to know is how smart he is, not teach him how smart you are.

I never saw anybody claim that the method will take a Fico score of 400 and turn it into a 700+ in 12 weeks. It isn't a credit repair trick at all. It is designed to get young people who have no credit history a foot in the door and that is all it was ever intended to do. If you already have a score of say 500 or more then it probably won't help enough to see any difference at all or a very small boost at best.

It might also work for a new corporation to get it's own credit. I don't know about that.

 

TrueCredit doesn't use the FICO scoring model. It uses a different model (FAKO), one that might even be based on a different maximum. As such, it's good to watch for general trends, but you need to go to MyFico.com and pay to get a score based on the FICO model and even then it might still be different (although not as much) from what your mortgage lender pulls up.

 

That isn't going to work for you either. The reason is that there has been a lot of people who have gone that route with the difference being that they bought the seasoned trade lines of someone they don't even know. Fico and the credit bureaus are all working to eliminate the authorized user route and it could be that when they have their new software changes in place authorized users will no longer get any boost from the scores of another person.

If that happens in the fall and early next year as predictee you will simply have wasted the time and effort when you could have been doing something more productive.

 

Back to the basics here, what is your need for credit, and a higher credit score? Are you planning to apply for a mortgage, auto loan, CC within the near term? Credit is a tool, and having a defined objective makes the strategy fall into place.

As for the "loan" approach, this is a good method to help establish credit, and a few years from now, you will be glad you did it. If you do a couple of these "loans, your credit report will definitely show the benefit in the long term.

As Cap1sucks noted, the AU method most likely has a short life for helping your score. Getting added as an AU to a "good" account (an age of 7+ years, low balance to available credit), would show the most positive impact on your credit scores. But, be prepared to lose this benefit within a year or two.

If your goal is to maximize your credit score immediately, then go the AU route (with a good account). Pursue the loans route if you're looking for more longer term increases.

Or, do the combination, get added as an AU to boost your score now, use the improved score to help take out short term loans (at better rates), and then the paid off loans will augment your credit score down the road, when you most likely will lose the benefit of the AU status.

 

I'd agree with that. His AU route might still work because he says he would use an actual relative and if the last names are the same the new changes scheduled to start in September might let people with last names get some boost from the AU thing. That would still let parents help their kids get started with their credit. All we can do is sit back and wait to see how it all shakes out.

We should know by this time next year.

 

Since the "new" scoring model" is supposed to be intiated with only one CRA, the new game will be trying to target credit apps to those businesses that do not pull that "one CRA". It's going to be a messy "shake out"!

 

I wouldn't say he's wasting his time. All it takes is a simple phone call from the relative to add him as an AU.
That simple phone call might raise his score in the 700's. Sure, it may only be for a few months- but that's just enough for him to get back on his feet.