Having good credit is probably one of the most important things you must have. If you are looking for a good way to boost your credit score you may want to invest in a CD secured loan. What is a CD Secured Loan? This a loan that is taken out against any CD( Certificate of Deposit) that you may have or establish at the bank. It is a good way to establish credit because the loan is guaranteed to be approved sense it is taken out against your CD. Another good point is your CD remains, and you still gain the interest during the term of your CD. After the loan has been setup your bank will cut you a check and give you payment schedule. If you really don't need to use the money I suggest putting the money in a savings account and setting up automatic withdraws to make payments. The main goal and objective is getting the payments to the bank on time, that way they can report to the credit bureaus that you are on time and current with your payments. The bank reports to the credit bureaus monthly and the credit bureaus update credit scores every three months. So after the first three to six months you should notice see an increase in your credit score. Ideally if you had the cash assets you should open two or three accounts secured with a CD secured loan. This will help increase in your credit scores that much more. There is no quick way to build credit it takes time to do. So even if you were to pay your loan off early this would only get you part of the increase in credit score you are looking to get. If anyone has questions about credit repair or raising scores you can email me through my Creditnet profile. Merry Christmas and Happy New Year! David Frizzell Dispute Assist
A word of caution- expect the loan to be priced much higher than the rate you're earning on the CD. So just make sure you weigh all the costs involved before moving forward.
I agree. Also, paying on a loan consistently, won't increase your score as much as if you got a secured credit card, kept the balance at 30% of the limit and paid it consistently on time. In six months of keeping the balance at 30% or below of the limit and paying on time can increase the score by 100+.
Doesn't diversifying your credit also boost your score? If you don't have any installment loans, I would think a secured signature/cd loan would give you payment history and diversification "points" to boost your overall credit score. This would be in addition to having 2-3 credit cards (secured or no) that report to all 3 bureaus and generate monthly payment history.
Credit mix is an important part of the FICO score, but it accounts for a very small percentage compared to responsible credit card use and managing your credit utilization ratio. Anyone seeking to build their scores should focus on that first before trying to improve their credit mix. In fact, it's quite possible to have good FICO credit scores without ever having an installment loan.
Revolving credit > installment loans when it comes to building credit. I would definitely recommend the secured route for any users late to the party reading this: Secured Credit Cards For People with Bad Credit - Creditnet.com
Lots of oldie but goodie threads you're resurrecting Jason; all good stuff for new and old members alike! Thanks!
