Over my years on Creditnet (mostly lurking over the last two), I've heard occasionally discussion of the savings secured loan. Basically: You take an amount of money (some credit unions and banks require $500 minimum, others don't care, credit experts say $1,000 is optimal) and go to credit union or bank #1. You tell them you want a 100% savings (or share at CU) secured loan, with your $. MAKE SURE they will not pull an inquiry (if this is essential to you) and that they report to credit bureaus. They will take your say $1,000 and deposit it into the savings account. The amount will freeze and become available as you pay the loan off. You will get the $1,000 right back as the loan. Repeat this at several banks/CUs if you can. Most rates are 2-3% above the savings interest rate. Get the loan for 12 or more months if possible. Once done, put that $ aside and use it to pay off the loan. Some banks/CUs will even set up your savings account to pay itself off, but this is rare. Whatever happens, make sure you pay those loans! Put the $ in another savings account to earn interest to offset your loan interest. You now have multiple positive installment tradelines. I was skeptical as to whether this actually worked. Well, in two months I have had my score jump from 330 on EX to 476! Without doing anything except paying these loans. I plan to keep repeating this. Banks that I am aware of allow this: Virginia: Chartway FCU, ABNB FCU, Bank @LANTEC California: First Entertainment Credit Union Many do, just ask. Southtrust in VA allows it, but if you're on ChexSystems (as I am) you will NOT be able to open the required savings account to do this. Questions welcomed. Good luck!
Re: Rebuilding: savings secured lo I did a version of this and I'm having similar increasing to FICO. My credit union required a deposit of 115% of the loan (to cover possible default of interest, they said). I didn't keep the money side to pay it back monthly. I'm just making the periodic payments from my income, as my original seed money was a paycheck.
Re: Rebuilding: savings secured lo get secured credit card Bad-Credit-Advisor.com http://www.bad-credit-advisor.com/secured-credit-card.html
Re: Rebuilding: savings secured lo No, the bank told me this has a stronger affect on the scores. I don't have to do above the loan, I just pick an amount, it goes into a frozen savings and once I've paid it off, the $ in the savings is mine. So I get a savings PLUS a positive trade line.
Re: Rebuilding: savings secured lo I had three banks tell me they could give me secured cards, but advised against it. They said this is considered a very positive way to build credit. Chartway also gave me an open ended agreement, meaning I could give myself "increase" of the "loan" and thus keep aging the tradeline. Very efficient so far. I heard USAA allows $5,000 CDs as collateral for a loan and reports as unsecured. If I can get that kind of money, I'll do that.
Re: Rebuilding: savings secured lo Can you guys clue me in a little bit more since we will have some cash next month, and we bank with USAA. What is the actual plan, I get the effect of being able to increase your fico, but we were thinking of going the secured card route, but this seems much better. Thank you
Re: Rebuilding: savings secured lo Basically, you borrow against your own money. Here's an example of one of my loans: I went to Chartway FCU in Virginia. I live in one of their qualifying cities, so I was able to join. I am on Chexsystems, but they let me open a savings account. (no ATM, which is fine because the SOLE purpose was to establish a collateral account.) I gave the woman $300 (this was in addition to the $5 minimum share requirement to join) and she set me up in a share-secured loan. The terms I got: 12 months, 4.5% interest (so very minimal cost). No inquiry pulled. Guaranteed approval. So she then froze the $300 I gave her as collateral on the loan (basically I don't pay, they screw my credit and take my money.) But then since this was a loan, I got $300 put into my savings account as available. So, my actual balance was $613, available $308. ($300 for the loan and $5 for the share membership.) I am leaving the $308 in there to earn interest. They will be accepting my payments in person (I wanted it this way so I could try to have a savings account for real for once). As I pay, they unfreeze the corresponding amount. I did this with differing amounts at Bank @LANTEC and ABNB FCU. I now have $1000 in hand and plan to re-attack Chartway (the lady was VERY nice and said she'd be thrilled to do multiple loans and such) and some local and nationwide banks and CUs.
Re: Re: Rebuilding: savings secure 1) Banks are great at talking about products they offer, but truly you can't always look to them for info on tricks to increase your FICO. 2) When you say "They said this is considered a very positive way to build credit. " I'm guessing that you are referring to establishing an $$ secured Installment loan versus a secured Revolving (Visa/MC) accont. 3) The strategy I used was to take my $$ and first establish a secured Installment loan. Then I take the loan proceeds and establish a secured Revolving account. I was lucky, because the credit union I used allowed cash advances (no additional charge) on the Revolving (Visa/MC) account. So I didn't even wait for the plastic to arrive. I used my computer to cash advance my Visa to the maximum, and transfer the $$ to my checking account so I could use the $$ to pay bills (since this wasn't extra $$, it was my paycheck). I could have been ambitious and churned these same $$ into similar accounts at three credit union/banks. If you read about how FICO scores are generated by FairIsaac you'll notice that greater points are given to a good MIX of accounts (Revolving, Installment, Real Estate, etc.) I hope this helps.
Re: Rebuilding: savings secured lo I'm guessing that each bank/cu that does this does it a little differently. At ours, we take a "loan" out of let's say $2000. (What makes it nice is that we don't front the money - so we can choose what ever up to 3k I think) What we're essentially doing to taking loan of which we pay on before we get it physically. So they place this money in a frozen account, we pay the installments and they report it to the CRAs. Once the "loan" is paid off, we now have a good TL plus we have a savings of X amount plus INTEREST. A win-win situation to me.
Re: Rebuilding: savings secure Yes, at least I was. With mine I don't have to bring $$ to the table. This is good to know, I didn't realize this. Thanks! BTW goldhumminbird, I'll post an upday soon on that situation regarding the PP you asked about.
Re: Rebuilding: savings secure I *like* not having to put the money down first. If I could make a loan like this, it would be a higher amount and would like even better. I'll have to check around and see if anyone will make me this offer.
Rebuilding: savings secure Me too! I have a thought, I don't know what state you're in, but go to the National City (.com) web site and check their locations and see if there's one close. If there is not and if you can 't find a local institution that does this, it might be possible to sign up with their online banking and do the same. Just a thought.
Rebuilding: savings secure Thank you so much. I'll definitely check out National City. I did a quick look on their web site and they don't appear to have any ATMs in WA, but I can contact them and see whether they do loan outside the state of their HQ.
Rebuilding: savings secure Any advice? One of my loans is for $300. I paid $50 today, and now have a $250.15 balance and it's showing 10 more payments ($25 each) due again starting 10/15/04. Should I just pay $25 a month starting in August, or what?
Rebuilding: savings secure There is zero value in paying more than the minimum on a savings secured loan. The entire point of opening such an account is to show a long history of payments. This rebuilds your credit. You may as well make payments on time, but no sooner. Goldhummingbird
Rebuilding: savings secure I went to ABNB to open another loan. I made several major mistakes that I hope serves as advice: 1) I did not go to the same branch and same person who gave me NO trouble before. 2) I ASSUMED this woman would not pull a hard inquiry and failed to ask. 3) I was not clear enough about this was not due to financial trouble. Thus, I was denied the right to borrow against my own money and instead given a long, almost rude lecture about the big lie: "Nothing except paying every creditor you owe will ever fix your credit." We all know that's false. I will dispute, dispute, dispute and now their competitor CU, Chartway, will get virtually all my business. In a month, I may go back to the same woman and branch I visited before. I am pissed, but mainly at myself for failing to take the proper precautions. Chartway opened two more secured loans for me today, and I did ask first for the woman I saw before and about inquiries. The rep at Chartway could not believe ANYONE would want to pull a hard for such a loan. Too bad Chartway doesn't give checking accounts to those on Chex.
Re: Rebuilding: savings secure I know it was mentioned that some creditors will loan you the money and then put THAT money into the savings account to secure that loan.... but.... this is what I did: I applied for a shared secured loan at my credit union. I told them that when the loan was approved I would bring in my deposit. I deposited my paycheck (cashed it first) and walked back out of the credit union with the same amount of $$ from the loan proceeds. In other words, I took my $$ I was going to pay bills with anyway and did this in one day, then paid the bills.
Re: Rebuilding: savings secure Sure sorry to hear this author. Something sounds wrong wrong wrong.... any chance the branch manager can correct this (at least the hard pull)?
Re: Rebuilding: savings secure Ok, I know it's late and I've had a long day, but let me see if I understand this. You basically exchanged your paycheck for the loan amount? Which would mean, you paid it immediately back.... (told you, long day)... and if that's the case, how can it help if you're not making payments on it?
