Carolyn Almennigen | almennigen

How to Improve your Credit Score

Dec 21st 2010 at 1:41 PM

First, I must warn you it takes a little money. If you're living hand-to-mouth, you may want to wait a while. You'll need to have $500 for about 6 months, and about $100 to spare. Here's how to go about it:

1. Become a member of the local credit union if possible. It usually only takes $5. If you haven't joined a local bank, do that also. You'll want to open a savings and checking account at each place. Order and wait for your personalized checks, then open a checking and savings account at another bank.

2. Take a personal loan for $500 from the first bank, using the $500 cash for collateral. Make payments on time for 2-3 months.

3. Then take out another personal loan for $500 from one of the other banks, using the $500 cash from the first bank as collateral. Make payments on this (as well as the other) on time for 2-3 more months.

4. Take out another personal loan for $500 from the third bank using the $500 from the second bank as collateral. Make timely payments on all three loans for 2-3 more months. Now you have three good references for timely payments, which will enable you to go to the next step.

5. Apply for a credit card from any of the banks. Not all of them, just one. If you're approved, buy something. Either return it or pay almost the whole amount when due. Do this for 6 months, then apply for another card from one of the other banks. Try to keep some activity on it each month. Then in 6 more months, try for a card from the third bank.

6. If you get turned down, wait a few months and apply to one of those credit cards for rebuilding your credit. Be sure to look at the fees and interest rates. I saw one with a $250 limit but $170 in fees up front. With a little hunting you can find one that's reasonable. Don't apply for a card more than one every 6 months; it looks bad.

7. You may also try for a store card if you get turned down for a regular credit card. They don't count as much as a regular card, but they do count, and are usually easier to get. Again, put some activity on it each month. You can apply for a store card 2-3 months after applying for another card, but I wouldn't suggest going any faster than that.

8. The next step is to get a car loan, when you need to buy a car. Loans for new cars are easier to get, but the value of the car goes down the minute you drive off the lot, so be wary. A year of current car payments, loan payments and credit card payments and you should be ready to get a mortgage loan.

Remember, you pretty much have to prove you don't need a loan before you can get one. This process takes a while, but it should work.

1 comments
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Aug 29th 2019 at 6:56 PM by lindarose11
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