On the radio this morning they were talking about building credit by doing the following: Joining a credit union. Opening 3 savings accounts with them by placing aboujt $300 in each acct. Then getting a collateral loan for about $275. They said DO NOT walk out of the bank with the money, just have them use your acct. to pay off the loan. Does anyone have any thoughts or experience with this?
well, the thought is to get a secured loan, take the proceeds from the loan to another bank and do the exact same thing, etc. it will help you build credit over time.
Yes, you can't pay if off right away. Put the money in a savings account so you have it to pay off the loan if needed. But try to pay off the loan without touching your collateral. You have to learn to service your debt (meaning make payments) and still live within your means. At some point you will need to have revolving debt like a credit card to show you can handle that as well. Part of your score is based on the mix of credit.
