A quick way to improve credit if you cannot get a loan

Many people have little dings or problems on their credit that stop them from getting the best credit rating or paying a higher interest rate when they do borrow on credit. For most people, getting credit is just a matter of applying for a credit card and using that credit card. However, what do you do if your credit is so bad that you can’t get anyone to extend you credit so that you can improve your credit score. You may feel stuck. There are two main things to remember when trying to build your credit.

The first thing to remember is that you need to have trade lines or lines of credit that are open and being paid on in your credit profile. If you don’t have any open lines of credit then there is no way for a credit agency to rate you or give you a score. So in a second I will show you how to get trade lines even if you have been rejected in the past. Second thing you need to remember is that you need to make nice with your old creditors. If you have old credit issues on your credit then you need to call the creditors and negotiate either a settlement or some type of repayment plan. You don’t need to agree to anything you can’t pay. Don’t be afraid to talk to the creditor just be confident and let them know what you can and cannot afford to do. Something is better than nothing, when it comes to paying off old debts.

So back to the new trade lines. Once you are working with your old creditors you need to have at least three open trade lines that you are paying on and have never been late on. This magic number of three trade lines will make a huge difference in your credit score after you have them setup and you are paying them. The best way I know to do this, regardless of credit, is with a passbook savings account. Here is how it works.

Take $500 to your local bank and open a CD at that bank with the $500. Take the CD certificate and get a loan against the CD for $500. The bank will gladly give you a loan because they are holding your CD if you default. They will loan you $500 and you use that money to pay back the loan. The loan must be for at least 6 months. It will establish a line of credit at a major bank and they will not deny you because they are already holding the money. It will cost you a little interest probably in the range of $20 over the entire life of the loan. Do this process at three banks and you will have three new established lines of credit at three major banks.

This will give you a significant boost to your credit score as long as you make the payments on time. Do not pay early and do not pay over what you are suppose to because you need these loans to continue for at least 6 months.

This trick alone can add major points to your credit score and help you establish new credit even if you have been turned down in the past. This is an excellent first step to improving your credit. Hope this helps you…Until next week. God Bless!

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