Credit Pursuit

Another way to improve your credit is to go to two or three banks and obtain a certificate of deposit in each. Find out the minimum amount of installment loan that each bank will take. Then, use at least that amount for the CD. If the minimum amount is $1,000 dollars, then that is the amount of the CD.

About two weeks later, return to those banks and ask to borrow the same amount of money you already have on deposit. Offer to use the CD as collateral for the loan. Make sure that each loan is an installment loan of six months or longer. This is necessary to ensure that the loan goes onto your credit report. Bankers are very comfortable in making these loans because the collateral is right there in their own bank. The interest will be minimal as well, since most are only 2-3% over the amount you will be earning with the CD.

Don't be shy about informing the banker that you are attempting to establish credit with their bank. Bankers will, after all, inquire as to the purpose for the loan. If done correctly and payments are made on time, it will be totally possible to eventually take out a mortgage with the bank in the future. Bankers will love the long term planning idea and it builds trust, which is hard to purchase in any situation.

When you have obtained the loan, take the money and place it into an interest bearing account. You will use that money, plus the interest it earns, to help pay back the banks. You will then receive a payment book of coupons, or some alternative record keeping method for making those payments on the loan. You'll then make one payment every Friday for the next month. It will help with credibility and trust to perhaps make one or two payments personally with the loan officer themselves. After this first month, simply make the rest of the payments monthly until the secured loan is paid off.

Now you have retired the loan faster than the payoff period and you also have three references for credit. On credit applications be sure to include the name or names of the loan officers you worked with, for you can be sure that credit grantors will be calling those persons for information about you and your credit worthiness.

Once you have completed this technique, go back to those banks and apply for a $500 dollar line of unsecured credit with a 60 to 90 day loan. Then as before, pay ahead of schedule. You will then be able to go back every six months to those same banks and apply for larger and larger amounts and create an unsecured line of credit.