to: lizardking, building credi

Discussion in 'Credit Talk' started by Ender, Mar 15, 2001.

  1. Ender

    Ender Well-Known Member

    I recall you posting this msg.. I have provided a copy/paste of it below my msg. I had one question regarding this technique i wasn't sure about.. so you say you get $1k, deposit this to buy a CD to secure your $1k LOAN. With this loan, you take this to another bank and do the same, several times.. so let's say uou now have 4 banks all with loans of $1k each extended to you, and you also have 4 secured CD's in each and you are left with $1k CASH from the last loan.

    What next? Do you use your $1k in CASH to make payments for all 4 accounts during the next 6 months? Or do the secured CD's cover the loan, and you end up just getting the difference in interest gained on cd - interest gained on loan (or paying the difference) after the 6 months passes? Can u explain further? Is this effective and have you done this yet?

    I feel that if this works.. then this in conjunction with getting onto another user's card and piggybacking method would work excellent for building credit. What do you think lk?


    If you have $1000 you can add your own positive credit to your report.

    Goto your bank and tell a loan officer that you would like a loan for the minimum amount required to have them report it to the credit bureaus. Tell the loan officer that you are doing this specifically to build credit. Offer to buy a 6 month CD worth $1,000 to secure the loan.

    Since this is a totally secured $1000 loan with a six month payment plan, you will get the lowest interest rate possible. It will likely be only 2% higher than the CD interest rate that you are earnings. Thus the cost of getting this positive line on your credit report is roughly $10 in net interest costs.

    You can take the $1,000 loan and goto another bank and do the same. Do this with about 5 banks, taking the resulting $1000 to the next bank each time. You total cost after 6 months will be less than $100 after extra interest costs and you will have 5 positive bank loans paid off. Those are great lines to have on your report.

    My math might be a bit off on the total net interest costs, but not by much. I read of this method on another website. I have never actually done it myself. I will likely try it soon.
  2. mother2

    mother2 Well-Known Member

    I did this last year

    I was reading a book (more like a bible) on "how to get AAA credit in 30 days", by.....sorry I forgot his name.

    Anyway, this technique was in it. I took $1000 and deposited it into a CD account. Then I borrowed against it. I then took the borrowed $1000 and opened up another savings account and borrowed against it. So now I have 2 secured loans. The last $1000 I borrowed, I placed it in my checking account. I could have opened up another savings account but I didn't want to get too overwhelmed. The once the first payment came, I started paying on the loans. Once 6 months past, I paid off the first loan in full. Once the funds were unsecured, I took the money out and paid off my second secured loan. This positive credit is on all CRA's and has helped a little in rebuilding credit. It's also great for those with little to no credit history.

    You will have enough money to pay the loans off. Just think of it as a "domino affect". Also, don't spend the money. You will begin and end with the amount of money you secure.

    Hope this helps and is not too confusing.
  3. Ender

    Ender Well-Known Member

    Re: I did this last year

    The part I don't understand is the payments part.. so this is what I do understand. At the end of the first phase of borrowing/opening accounts, etc. You now have:

    X Number of Accounts Open with $1k Loans Secured by a CD
    $1K in checking account

    Now, payment wise.. how does that work? Depending on the number of accounts u have open? So if I have 4 accounts open secured by CDs, do I do payments of $100 to each account, paying off 1 account maybe more so I can get the $1k secured CD back - then use this to pay off the others? How does it show up on the tradelines if you pay off one of these things early? Or how about if you just have the money and pay like $900 the first month, and pay the last $100 the last month of the installemnt.. on the CR, will it show you had "good payments" throughout the period of the loan?
  4. mother2

    mother2 Well-Known Member

    you got the idea

    The loans that were secured by your funds are "Installment" loans. You pay a certain amount every month, until paid in full. This is how I obtained 3 positive tradelines within 6 months. I would pay the fixed amount for 6 months. Then the following month, I paid the first account in full, withdrawled my funds and paid off the second account. ****Now, please keep in mind that you have 2 other loan payments that will be due around the same time***** This is why I just used 3 accounts. Also, the amount of money can be less. I chose $1000 but you can do it with $500. Also, you don't necessarily have to wait 6 months until you start paying the loans off in full. But many places will tell you 6 months payment history is better.
  5. Ender

    Ender Well-Known Member

    Re: you got the idea

    The reason why I ask about how long the payment history should be is to resist the temptation of spending the money.. so paying off $900 of the $1000 and only have $100 left.. then pay this the last month as the final payment. Then on the CR, it should still report that it took you XXX months to pay it off, and show perfect record of paying, right? It doesn't list how much ecay payment was.. so theoretically, the score will be the same..

    A question I thought of however of this whole program.. so how much capital do you really need?? You just need enough to have for each account you let sit in the account, plus enough to cover the payments.. so basically, double whatever number of accounts you open minus one account amount. This is a bit confusing.. so lemme use real examples:

    Bank A - $1k CD Purchased, $1k borrowed
    Bank B - $1k from Bank A - buy CD, Borrow $1k
    Bank C - $1k from Bank B - buy CD, Borrow $1k
    Bank D - $1k from Bank C - buy CD, Borrow $1k

    Now, I am left with $1k from Bank D. With this, I can really only sustain payments for 1 bank. That means I need $3k for the temp. 6 mos my money is tied up. Thus, the formula would be:
    # Banks x $1k (amount for each cd and cost of secured loan)
    - amount for 1 bank: $1k

    So, if I want to do 4 loans, I need a spare $3k to do this, under the assumption of doing 1K.. is this correct?

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