Increase your credit score (part 2)

By
Real Estate Agent with Altera Signature Properties

Here is a tip I heard from a financial advisor.  I have not tried this personally so I cannot guarantee the success, but it makes sense and seems worth trying!

First you will need to start off with $1000.  If you do not have $1000 then borrow it.  Borrow $200 each from 5 family members/friends if you need to. 

Once you have the $1000 dollars, go to a bank or credit union and ask if they report their loans to credit agencies.  If they do, deposit the $1000 into a savings account and request a $1000 loan. 

Take the $1000 from that loan to the next bank and do the same thing. 

Do this a total of three times. 

You will then have three savings accounts with $1000 in each, three loans of $1000 each and finally $1000 in cash.  Immediately go pay back whomever you borrowed the original $1000 from. 

What did you accomplish?  You now have 3 open accounts on credit.

Now you will begin making payments on each of them.

On the first month, withdraw $300 dollars from each savings account and apply it to each loan. 

On the second month, withdraw $300 dollars from each savings account and apply it to each loan.

On the third month, withdraw the remainder and pay off loan. 

You will need to make up the difference out of pocket for any interest owed.  You can figure that it will probably be about $50 a month in interest for about two months for all three loans.  Check with the bank or credit union to find out how much the interest is.

The next month you are reported to the credit agencies you will have a 850 credit score if you had no credit to begin with and if you had credit already you will see a substantial increase in your score.

Good Luck! 

 

 

 

 

Comments (4)

Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate
Hi Jennifer:  What a fiendishly unique way of helping increase your credit score.  It sounds so "devious" that I'm surprised I didn't think of it myself.  Thanks for sharing...
Dec 01, 2007 04:32 PM
Jen Romiti
Altera Signature Properties - Pleasant Hill, CA
QSC, ABR - Pleasant Hill, CA, Contra Costa County Realtor

Karen:  I wish I thought of it!!  It's definitely worth a shot!  Something to try for the late teen/college aged children!  

 

Dec 01, 2007 04:36 PM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator
Looks like this post is just now being discovered even though it's 10 months old! The plan can work under ideal conditions but two things to note: New loans DECREASE the credit score until they have seasoned. We (mortgage bankers) generally like to see 12 months of maturity on a loan. Also, make sure not to CLOSE any accounts after just 90 days for the same reason. We like to see how the borrower manages debt long term. Still, Jennifer, good post! 
Dec 04, 2007 03:04 PM
Jen Romiti
Altera Signature Properties - Pleasant Hill, CA
QSC, ABR - Pleasant Hill, CA, Contra Costa County Realtor

Ken: Thanks for reading the blog and for adding those tips!  I appreciate and welcome the input!  I tried to start up with AR a while back but just didn't really get it...Over the last couple weeks I have been on here much more and am starting to understand and like the site.

Dec 04, 2007 03:07 PM