I've seen a lot of people posting about getting a $1000 secured loan. I'm curious on how to do this, just go down and set it up, or is it called something specific?(like secured checking?) Then give them $1000 and the money becomes available or pay on the $1000 (like a CC)? Once it's paid off do they automatically unsecure it? Or does it show as a paid off loan? Do you have to have a checking acount or savings with a Credit Union to do this? TIA! KHM
I was asking my bank about this today. I can open any unsecured loan with them up to $2000 with a 600 credit score (they didn't say who they pull) up to $7500 with a 640. They loan for homes & autos with a 660. For an secured loan they said I just open a savings and it secures the loan. They report the loan as a regular installment loan and you make the payments like someone with an unsecured loan, in the meantime you are drawing interest on the savings account. She did tell me don't pay it off too early because it takes 60 days to report and if you let it go the whole term 6 mos-12 mos it looks better. My bank will do loans like that from $200 & up, whatever you want to deposit in the savings account.
Christi- Is your banka credit union? I have a savings account, but it doesn't report and it's just a regular bank not a credit union. So if I go to a CU tomorrow with say $100 and I want a secured savings(?) will they report it? Will they pull a credit report? Thanks! KHM
No they don't report savings accounts, only the loan you open (installment loan) and your savings account is the security (so it's frozen) until the loan is paid in full. This is so people with bad credit can still get an installment loan. It's a regular bank, but my credit union said they will do secured loans with $500 or $1000, still freezing the savings account. They WILL report the loan as a regular installment loan (not secured) on the credit report. Mind...it's in Texas..called Regions Bank.
I have done this with a couple of credit unions. With one of my credit unions I took a secured credit card as well. The credit card will become unsecured after a year of on time payments. I have had my loans for eight months now. They report on two credit reports and they do report as secured installment loans (of course they don't say what they are secured with for all anyone looking at knows it could be a computer, furniture, etc.). I did this because I needed more installment history on my reports. You may check with some banks as well. If you are very lucky you may find one that will have something called a "fresh start" loan. This is a loan specifically for those with no credit or those rebuilding. This loan program will give you a loan using the loan proceeds for collateral as opposed to you having to open a savings account with money upfront. They will make the loan for something like a couple of thousand and place that money in a CD. The term of the CD matches the term of the loan. You can take it out for 1-3 years. If you chose a term of over a year, you can pay it off early, but the money is locked in the CD until maturity. You could then take the money out of the CD early if you can live with the penalties. In the mean time you are earning interest on the CD. I would pay on it at least a year, then pay it off as soon afterwards as you can and let the CD sit there. This too will report as a secured installment loan. If anything, not only are you building positive credit history, but you are also building a good loan relationship with the lender for future loans.
Hey, I am going to call my credit union and see what they say. I really need to build positive tradelines. that was a great idea.
