secured loan to increase credit score

Discussion in 'Bankruptcy' started by Brian York, Dec 14, 2003.

  1. Brian York

    Brian York Guest

    i read a couple of times that a way to increase your credit score is
    to get a secured debt - like opening an account at a bank or credit
    union with $1000 and then get a secured loan from that financial
    institute about the same amount.
    Of course that cost you a bit in interest but if it helps to build up
    your credit score.

    Has somebody else heard about that - especially if that works?

    And then a second question according to that:
    is a bank/credit union pulling a credit report for a secured loan?

    Brian York, Dec 14, 2003
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  2. Brian York

    peter Guest

    That is definitely a helper on the credit scoring. I am about to do a
    secured loan for $1000, and it is only at 3% rate. For $30, it's well
    worth the help it will provide.

    Another way to increase your score is to try to get all the negatives
    removed from your report. I just had a BK 7 discharged in October. I
    pulled my report from Equifuax on Nov. 1, and I disputed 4 accounts and
    2 BK filings as "not mine." My first BK 7 converted to a 13 and was
    dismissed. My 2nd BK 7 was discharged. Anyway, of the 4 accounts, 2
    came back verfied, and 2 were deleted from my report. That's a plus!
    On the 2 BK 7 filing disputes, get this......1 came back verfied and 1
    was not verfied - thus it was removed from my report. Here's the
    kicker......the BK that was discharged was removed from my report. The
    one that I filed in Dec. 02 which was eventually dismissed, came back

    Hopefully, that will help with getting the other accounts that say
    "included in bankruptcy" off that report. How can they say it was
    included in bankruptcy if the only bankruptcy they are showing is one
    that was dismissed?

    I got lucky on my first dispute, and I will eventually dispute every
    negative remark on my report. Be patient.
    peter, Dec 14, 2003
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  3. Brian York

    Andrew White Guest

    1. I don't understand your point about "opening an account and then
    getting a secured loan". You can get a secured credit card from
    issuers without having to open any other accounts.

    2. If you opt for a secured credit card, you don't have to pay any
    interest, if you pay off the balance every month. But, as far as I
    know, all secured credit cards carry an annual fee.

    3. I don't know about other types of secured loans, but secured credit
    card accounts are rarely reported to credit bureaus. They are a great
    tool to establish credit, but not the way you described. Some issuers
    will convert your secured card to a regular one after a certain period
    of time, like a year, of good payment history. THEN you get your
    deposit back and the card is reported as regular credit card to credit

    4. A bank or credit union is likely to pull credit report any time you
    open your first account with them - ANY kind of account.
    Andrew White, Dec 14, 2003
  4. Brian York

    peter Guest

    A secured loan will report positvely to the credit reporting agencies.
    A bank usually charges a small interest rate for the secured loan. Well
    worth it when rebuilding credit.

    As for a secured credit card, American Online Bank has the best card out

    They have a low annual fee, report as "UNsecured" to all 3 CRAs, and
    will convert to a true unsecured card after 18 months of perfect credit.
    For cards, that is the way to go.

    I think the original poster is looking for ways to rebuild his credit.
    In this case, any low interest rate loans that are reported to the CRAs
    is worth his time.
    peter, Dec 14, 2003
  5. The bank is likely to pull a different report, which not a credit report
    and does not count as an inquiry on your credit scores. ChexSystems
    keeps records of bank accounts opened and closed, checks ordered, checks
    bounced, and similar things. A bank does not want to have checking
    customers who are likely to bounce checks, so it will pull the
    ChexSystems report.

    While ChexSystems is not a credit bureau, it is subject to many of the
    same rules such as the Fair Credit Reporting Act. You can request a
    copy of your ChexSystems report (free in some states), ask the bureau to
    reinvestigate an erroneous entry, and add a note of explanation.

    I don't think banks normally pull credit reports when you open savings
    or checking accounts (unless you apply for overdraft protection, which
    is a line of credit); they may not even have authorization to do so if
    you have not applied for credit. I have changed banks several times,
    and never seen an inquiry on my own credit reports for savings or
    checking accounts.
    David J. Grabiner, Dec 14, 2003
  6. Brian York

    Answers Guest

    A Few Comments:

    Bank of America seems to automatically pull your score as part of its
    processing of a checking account - even without overdraft.

    Washington Mutual does not pull it as a normal practice.

    Banks not wanting to open accounts for customers who bounce checks???
    Let's see... You write a bad check. The bank doesn't pay it, but
    charges your $25.00. The submitting bank then resubmits the check and
    sufficient funds are not available - oops! another $25.00 your bank
    just made for a total of $50.00 that they will grab when you make a

    A certain large bank in the Midwest made more money from overdraft
    charges recently than they made from ALL other "services."

    If I were a banker I would love to have you as a customer if you
    bounced checks several times a month.

    Daniel Thompson
    Answers, Dec 18, 2003
  7. Brian York

    Answers Guest

    Hi Brian,

    Yes, it will work. You can also use secure credit cards from Capital
    One and First Consumers to achieve the same thing. Weigh all of the
    costs associated with any of these means. A big fat bank account with
    a long term balance should get you a signature loan from your bank.

    Hint: If you get a secured card, charge it up, photocopy the bill,
    divide the balance by four and send in a 1/4 payment every week. This
    type of activity will trigger a computer generated credit limit
    increase with some companies.

    Some of the increases are downright obscene!

    By the way, try to do most of your credit apps six months prior to any
    major credit purchase.

    Daniel Thompson
    Answers, Dec 18, 2003
  8. Brian York


    Mar 20, 2013
    Likes Received:
    In addition, here are some steps to repair your credit. First, try to get a credit card if you don't have one. There maybe some myths that you have to carry a balance to have good scores. But having and using a credit card or two can really build your scores. Another is to add an installment loan to the mix. Take note that you'll get the fastest improvement in your scores if you show you're responsible with both major kinds of credit. Moreover, pay down your credit cards. While paying off your installment loans will help your scores, it is not as dramatically as paying down revolving accounts such as credit cards. Also, lenders would like to see a big gap between the amount of credit you're using and your available credit limits.
    bruceingram1958, Apr 4, 2013
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