Turning No Credit Into Great Credit In Just 8 Months
Posted by: Jim Bransby in Business, tags: BusinessWe all deal with having to start our credit history from zero at some point in time. For me, it began when I was out of the country for 7 years. When I returned to the United States, I tried to apply for a credit card, only to find out that no one would extend me credit because of my lack of credit history. Apparently, no credit is even worse than bad credit.
It can take years to build up a credit rapport, especially when your history is blank. But, I managed to turn my credit around in just 8 months, with a little research and a lot of hard work. I was in the market for a house and a car, and I needed all three credit agencies to report that my credit was excellent.
I began by calling come of my friends in the credit field, by searching the internet, even by reading books on the subject of lending. Using the knowledge I uncovered, I started to build my plan to bring my credit from nothing to the top 80% of debtors.
To build up a good credit history, you need to get someone to extend you credit. It sounds backwards, but with some planning and some cash, you can make it work. You have to start by allowing interest to accrue on your loan, otherwise, the creditor isnat going to make any money if you pay your bills off before interest collects, and they wonat positively report you for being a good debtor unless theyare making money.
In the first credit union I opened a checking account with $10,000. I asked for a secured personal loan of $8,000 against my deposit. I explained that I needed to establish credit and they were happy to help. In each case used the free online banking to setup auto-pay the loan each and every month. I walked out of the bank with $8,000 in borrowed cash against my, now frozen, $10,000 deposit. As the loan is paid back, the funds are released from the bank.
Credit union two was right across the street. I walked in with $8,000 and opened a new checking account. Again I asked for their help in establishing my credit and requested a loan for $7,000 against my $8,000 deposit. Off to the next institution depositing $7,000 and receiving a loan for $6000. Finally the last bank gave me a loan of $5,000 in return for my $6,000 deposit.
I started to get worried when I added it all up, and realized that I owed four different institutions $26,000 combined. I started to think about what I had gotten myself into, how hard it was going to be to keep track of my monthly payments, and that it was all going to come crashing down and destroy my credit forever. I decided to use online banking to handle the monthly payments, and it turns out that it was incredibly simple. The loans were all paid off within 8 months, and I created a record of being able to pay of large amounts of money each month.
In the end, I got $8,375 of my $10,000 back after all interest was paid. Each bank and credit union got a new customer and all got paid for their participation (the interest I paid to them). I, on the other hand, got a AAA credit report, four credit cards (two of which now carry a now $25,000 limit)
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