Hello, I just wanted to check if the following procedure actually helps to increase the score. Take a loan from a bank, say $1000 or $2000 to completely payoff in 6 months or 1 yr. Keep your checking account as collateral. (provided you have enough money in your checking account) Even have the monthly payments deducted from your checking account automatically. The loan is paid off on time in 6 months and 1 yr with regular automatic payments. (Ofcourse, you paid the interests too). The exercise tells that you have paid the loan on time and completed it without out any bad remarks, and the bank then reports your good payment record and thus help increase the credit score. Please let me know if this really helps! Thanks!
Does this type loan help? Yes Credit is showing creditors you can make payments on time. Having said that I would say you should do the loan for a min. of 12 months. I think 6 months would be a waste, doesnt really show any track record. If you can do a 3000 dollar loan for 36 months and just pay it off 15 or 18 months into I believe it would look better than a 1k loan. My personal experience was to do one for 1k and another for 3k, I stated them both on the same date. Over time this did help my score. If you havent already get a credit card of some kind and start getting credit history. Good luck on your repair. -Lucas
It does help. A positive credit reference is a positive credit reference. I doubt a bank would let you use your checking account as collateral. In all likelihood you would have to convert the cash into a CD. But that is even better because with interest rates the way they are now you will make a decent rate and offset the interest of the loan. I just took out a loan and used a new CD as collateral. I'm getting 5.5% on the CD, and paying 7.9% on the loan. IN the end, I am only paying 2.4% interest.
