Strengthen/build credit w/ 1000.00

Discussion in 'Credit Talk' started by PSUgirl, Jun 13, 2001.

  1. bbauer

    bbauer Banned

    This is all very true, but you didn't lose any money other than the interest costs on the loans. They may or may not loan you the full face value of the savings accounts. But that still does not mean that you lost the difference. It's still going to be right there in those 3 accounts when you get done and close them out plus a little interest besides although not much.

    What is important to note is that you will need an additional $270 if you intend to make each loan for exactly $1000. Each of the 3 banks will be keeping $90 in the account. That's so if you default on the loan, they have something "in escrow" to pay their costs of doing it for you.

    It all comes out in the wash at the end. Nobody is going to steal your money.
     
  2. PSUgirl

    PSUgirl Guest

    Thanks chriscraft, i was confused about that statement, "you will end up with your original investment of 1000" because if your using your last cash loan, plus the unfrozen funds to make your payments, then I didnt understand how you would still end up with your original investment.

    O, well... your right, im just trying to get postive trade lines so, im still going for it. ill keep you posted.

    psugirl
     
  3. PSUgirl

    PSUgirl Guest

    Bill, thanks for your post. And, your right....one of the banks that I contacted said that they will only loan 95% of your savings balance.

    so, if i deposited 1000 I could only get the loan for 950.00.

    Its also funny that you mention the extra money that you would need...if you choose to borrow 100% every time. I was told that same thing yesterday by a banking officer at one of the banks that I went to!

    Im sticking with the method that I outline. No extra cash needed!

    thanks bill

    psugirl
     
  4. bbauer

    bbauer Banned

    So the banker and I said the same exact thing??

    I wonder if that has anything to do with the fact that I have been there and done that before???

    LOL
     
  5. PSUgirl

    PSUgirl Guest

    When i just posted, I did ORIGINALLY ask, "from the method that I have first posted, it said that you get your original investment of 1000 back at the end, HOW?"

    So, I was asking for someone, who knew, to explain to me how the person whom created this method came to the conclusion that you get your ORIGINAL INVESTMENT BACK AT THE END.

    If the answer was "psugirl, you dont get your original investment back at the end...the person that created this was wrong!" I would understand. But, I thought maybe I was reading too much into it and didnt understand how they came to that conclusion. Your post had NOTHING TO DO WITH MY ORIGINAL QUESTION, but thank you anyway.

    psugirl
     
  6. bbauer

    bbauer Banned

    You don't get your money back???

    I take it that you mean you don't get your money back in full when you walk out of the first two banks???

    Because when you walk out of the 3rd bank, you just borrowed the $1000 for the 3rd time, so you do walk out at the end with more or less $1000 in your pocket.
     
  7. PSUgirl

    PSUgirl Guest

    No bill, my question was:

    At the end of the entire method, all the loans have been repaid and the method is completed. The person that created this method said "these ativities will all look very impressive on your new credit report! And, you should still have your original 1000."

    So, my question was how? Because, if you use, from this method, your last cash loan of 729.00 plus the unfrozen funds to make your payments. At the end of the method, when all loans have been repaid, how do you still have 1000?

    thanks bill

    psugirl
     
  8. river

    river Well-Known Member

    What is your point with the above repeated post? Can you spell it out? I still say: you can't believe everything you READ or been TOLD!!!!!!!!!! Your point hasn't proved anything!!!!!! I guess we both are having a hard time understanding each other. Guess it's JUST A PART OF LIFE, HUN!!!!!!!!
     
  9. bbauer

    bbauer Banned

    Alright, Let's do the math by the numbers on the situation and see what we come out with.

    First of all, just to make the whole thing facil, we will make the assumption, rather true or not that you can borrow against all loans 100%. None of this 90% stuff.
    Bank1
    1. You have $1000 in your pocket to start with.
    2. You enter bank1, open a savings account for $1000
    3. You go directly to loan officer and borrow $1000 using the $1000 in your savings account as collateral.
    4. Bank freezes the funds in your savings account and gives you $1000 cash which you put in your pocket and walk out the door.

    Bank2
    1.You have $1000 in your pocket which Bank1 loaned you.
    2. You enter bank2, open a savings account using the $1000 you have in your pocket, proceeds of loan from Bank1
    3. You go directly to loan officer and borrow $1000 using the $1000 that is in your bank2 savings account for collateral.
    4. Bank2 freezes the funds in your bank2 savings account and gives you $1000 cash which you put in your pocket and walk out the door.

    Bank3
    1. you have $1000 in your pocket which bank2 loand you.
    2. you enter bank3, open a savings account using the $1000 that bank2 loaned you.
    3. You go directly to the loan officer and borrow $1000 using your bank3 savings account as collateral.
    4. Bank3 loans you $1000 cash which you put in your pocket and you walk out the door. Your total "handle" was $4000. Your $1000 plus the $3000 the banks loaned you.

    REPAY THE LOANS.

    You have $1000 cash in your pocket and you want to make all the payments out of the $1000 bank3 loaned you.
    $1000 divided by 3 equals $333.33 per bank payments. Let us assume that the payments are $100 per month for easy figures. That means that you will have enough money out of the $1000 to make roughly 3 payments to each bank.
    When the 3 payments are made and it is time to make the 4th round of payments, you go into each bank and request that they unfreeze funds up to the amount of the payments you have made. So each bank unfreezes $333.33 and you now have the means to make the next 3 months payments or $1000 in your pocket again.

    You make the next 3 months payments and you again go back to the bank and request that another $1000 be released to you making a total of $2,000 that you have withdrawn from the 3 savings accounts. You have only got one more round of payments to go and you have $1000 in your pocket to do that with. You make the next 3 payments and your total payments have now equaled $3000. You are done with it and each account now has $333.33 in it minus any interest the banks charged you plus any interest the banks paid you. You simply close each of the 3 accounts, pocket the $333.33 in each account and you are now done with the whole process and have $1000 cash out of the accounts.

    Obviously you won't have that much because of the interest charged by the banks. But regardless of that fact, you still come out within a few bucks of what you started out with.

    That's how it works.
     
  10. Heckler

    Heckler Member

    Bauer, you are so full of it! Collateralization policies set by ABA require the funds used to secure each account to be frozen until all payments are made, or the account is otherwise closed. But I guess â??IFâ? you really knew what you are talking about, youâ??d already know that! River is RIGHT! Donâ??t believe everything you read people, particularly when it comes from Billie boy!
     
  11. PSUgirl

    PSUgirl Guest

    Thanks Bill!!!

    From the looks of your calulations, you dont even need the extra 270.00 if you choose to borrow 100% each time.

    If thats true, I might just shoot for 100% of my savings on each loan.

    Thanks again for taking the time :)

    p.s. I think its very important to ask these questions if your considering taking advantage of this message:

    1. What is the min amount will you loan on a passbook savings?
    2. What percent can you borrow?
    3. What is the APY on the savings account?
    4. What primary CRA's do you use for installment loans?
    5. Do you unfreeze funds equal to your payment?

    Any others??

    psugirl
     
  12. bbauer

    bbauer Banned

    Well, I used the 100% figure simply for the ease of calculations, not for accuracy. In actual practice, the 90 to 95% figure is realistic, not the 100% I used to make it easy to see the picture. I'd say 100% simply isn't likely to happen.

    I see someone else says that the funds are going to be frozen by some banking law until the loan is 100% paid off.
    If he is right, which I do not deny as a possibility, then the plan is not going to work very well unless you have sufficient funds to cover all the payments. That would obviously require a lot more than any $1000.

    When I last worked the trick, back in 1975, and here in Oklahoma City, the banks would release funds from the savings accounts equal to the amount of the payments made on the loan. The laws may have changed since then or they may be different from state to state or even the rules from bank to bank. I would sure hate to invest the $1000 without knowing in advance what the terms of the loan were. If I just went in on blind faith, and I turned out to be wrong, I'd be $3000 in debt plus interest on the $3000 and unable to pay. That would be worse than getting hung with a new rope. Never play poker without knowing the rules of the game.
     
  13. river

    river Well-Known Member

    Thank you Heckler!!!!! What we have here is the blind leading the blind!!She starts out posting something that she read somewhere else and jumps on the forum giving advice and at the end,she's back saying she doesn't understand her own post.Then you have this 71 y/o gentleman misleading this young girl,but comes back at the end contradicting himself. This isn't a good example for those that are seeking to improve their credit rating.
     
  14. PSUgirl

    PSUgirl Guest

    Bill, I sat down and used the method that I posted originally with the 90% borrowing. I did figure out that you do get your original 1000 back, by my calculations you actually got back 1004.49....or close.

    You have to remember:

    1. when you deposit the 1000 and borrow 900 the bank only freezes what you borrow...each time

    2. EVERY TIME you make a payment, that same amount minus interest of 6% is unfrozen....so 6% is .5% monthly.

    3. You actually still have a little bit left over that did not unfreeze when you pay off each loan....i calculated 4.50 from bank 1, 4.06 from bank 2, and 3.62 from bank 3.

    4. You earned 2% on you savings deposit. so, bank 1 earned 1.67, bank 2 1.50 and bank 3 1.35.

    All that added together gave me my answer....it was worth doing!

    Wow, i was determined to find out. If what I did was somewhat accurate, I think its worth doing, you do pay pennies to strengthen your credit.

    Ill keep update on my progress with the method.

    psugirl
     
  15. Heckler

    Heckler Member

    No if they give YOU any money!
     
  16. bbauer

    bbauer Banned

    An outstanding post indeed, sir!

    Bauer, you are so full of it!

    Would you please be so kind as to inform the inquisitive minds in attendance about the purpose of the above?

    Inquiring minds would like to know.
    ***************
    Collateralization policies set by ABA require the funds used to secure each account to be frozen until all payments are made, or the account is otherwise closed.

    Would you please be so kind as to cite the ABA reference numbers for those policies? Please also provide the date these policies were put into effect. Do they also affect state chartered banks and credit unions and savings and loan institutions who also provide their customers with checking and savings plans or does it apply only to nationally chartered banks?

    But I guess â??IFâ? you really knew what you are talking about, youâ??d already know that!

    Why is it that you must play guessing games? Either you know or you don't know. Which is it? Inquiring minds would like to know.

    River is RIGHT!
    Did I say that he wasn't? I don't remember telling him/her that (s)he was either right or wrong? If memory serves me correctly, I stated what the conditions were in Oklahoma City in 1975. I stated how I did it at that time and in that location. Did River state that in or about the city of Oklahoma City and on or about 1975, he attempted to perform the feat and that it did not work for him as I stated that it worked for me at the time? If so, pleae point out the post in which he made those exact statements.


    Donâ??t believe everything you read people, particularly when it comes from Billie boy!

    Now what was the purpose of that statement? In what way was it designed to enlighten those who asked for information?

    Heckler,
    Why are you in that handbasket and where are you going?

    nom de plume
    OR
    nom de guerre????
     
  17. bbauer

    bbauer Banned

    And the same thing applies when you use your credit cards in the manner that I suggest.

    By using a card for a week only and then switching to a new card every Sunday, you earn interest on the money you already spent. Over the course of a year, it will add up to some additional spending money earned on money you already spent 4 weeks ago.
     
  18. dlo64

    dlo64 Well-Known Member

    Okay with all this math and stuff. Think of it this way, whether you come out with the original amount or say you pay some interest or whatever, the point is at what cost is restoring your credit worth to you?

    To me it is well worth it whether you pay with unfrozen funds or just pay the interest back. IMO don't worry about how you end up with your original investment, just reap the rewards.

    A couple of things about this method. First of all, you do not necessarily need a passbook to do one of these loans. Very few banks offer passbooks these days. Credit unions don't offer them at all from what I am learning in my area. The bank or CU will just freeze (put a hold) on the funds that you are pledging as the collateral. So if you are interested in doing further business with the bank or CU and would like to continue to make deposits to your account, you can. You may withdraw any funds from your account above the pledged amount. Very convenient for those who would like to continue to save without opening further accounts.

    Also, you can do the loan at the same time you open your account as long as you fund your savings account or CD with cash. If you can do it, why wait several days then make another trip to the bank and take out your loan? So everyone I have encountered about this has been very helpful. They know full well what my intentions are and have been encouraging.

    My goal is not only to get more installment history on my report, but also to forge a good banking relationship with everyone I am dealing with. Kind of like networking. Doing this could help me to get further loans from these same institutions (unsecured) in the future. An auto refinance, mortgage, etc. Right now based on the score from my TU the CU's are willing to refinance me, but with building a solid lending relationship, I may be able to get the rates a little lower than what I qualify for based on a score.

    Just my 2 cents.
     
  19. godaddyo

    godaddyo Well-Known Member

    Personally, I dont know if the banks will allow you to use your frozen funds for payment at any point or not. If you can do that, then more power to you. I would just like everyone to know that if done properly this process will work. I have never used my frozen funds for payment, but if you use this scenario you will be well on your way to building a solid loan history and financial future... I would personally use at least 2000.00 to start and I would vary the amounts from there. I dont believe that it matters if you take the loans at consecutively or not. Just make sure that you wont have to incur any early payoff penalties. Other than that, any cost incurred is just the cost of rebuiliding ones credit. It is well worth it and it give you a jumpstart that would normally take much longer to accomplish. If you dont have the funds then borrow them from a credit card or someone who is willing to loan them to you. You will pay them back in a very short amount of time. Also, someone brought up using a cd as collateral. I used a cd and other investments. It can be done folks, just do it and good luck!!!
     
  20. judyputy

    judyputy Well-Known Member

    Okay, I have been reading this thread for a while and wondered if this will really get you the jump in credit "worthiness" that is claimed. Yes, you are getting installment loans and paying them off, which is a big plus to a credit report, but with three loans... roatating at the same time... with virtually the same loan amount....???? HUMMM??? Will this really be viewed as "real" installments loans or will loan companies and creditors view this as a manipulative way to falsely boost your credit worthiness?

    I am not bashing anyone here, just wondering out loud if the creditors and loan companies who we are trying to impress, will figure out what is going on and look on these loans without as much weight as normal installment loans received for a specific purpose...ie. home repair, car loan, etc.

    So, in order to satisfy my own curiosity I asked several people I know who are employed as mortgage processors, bank personel, and a credit union assistant manager. Here's what I found out. Most of the people I talked to said they have seen this type of "manufactured" loan cycling before. (their words, not mine) They also realize that you are using the proceeds from one loan to obtain another loan, and another loan. They are also aware that you use the proceeds from these loans to actually pay off the same loans.

    For this reason, they don't give these very much weight in figuring out whether or not they view you as credit worthy. They don't use thse loans as an example that you are able to obtain a loan and pay it off. At least, not the same as they would a loan you obtained for some specific reason. They are well aware that yes, you have three installement loans that you paid off on time, in full. BUT, they know that it was manipulated for the express purpose of boosting your credit worthiness and score.

    SOOOO, in short. Most lenders are smart enough to see these loans, taken out in a relatively short time span, with approximately the same loan amounts, as a manipulative plan to increase credit worthiness. Therefore, most say they discount them off hand and move on to the real stuff on your reports.

    With that in mind, you might want to think about why you are taking these loans out. If it's just for that reason, you may not get the desired result. Someone mentioned (sorry I can't remember who) using $2000 and changing the amount of the loans around. That might work if you spaced the loans out farther apart.

    This is not to bash anyones ideas, I was just curious as to whether the banks would catch on to the "plan" and really give you the credit boost you desire. In my opinion...NO. Just my two cents to think about.
     

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