| Most consumers are aware that negative items on a | | | | to $1,000. |
| credit report can be disputed with the three major | | | | B. You must be able to borrow up to 85% of your |
| credit reporting bureaus. Often, this process can lead | | | | balance on a 12-month loan schedule. This is typically |
| to a significant improvement in credit score through | | | | called a Passbook Savings Loan. |
| deletion of the derogatory items that were lowering | | | | C. CRITICAL: The bank MUST report activity on this |
| the score. | | | | account to the three major credit bureaus (Experian, |
| To achieve excellent credit, however, it's not enough to | | | | TransUnion, and Equifax). |
| just remove negative entries. Why? Because a lack of | | | | If the bank product does not meet these requirements, |
| positive payment history is also an obstacle to having | | | | then do NOT use that bank. There are thousands of |
| good credit. You need to demonstrate a record of | | | | small banking institutions throughout the country, so it |
| on-time payments in order to raise your credit score. | | | | should be fairly easy for you to find an appropriate |
| In this article I will describe two simple techniques for | | | | one in your local area. |
| rapidly ADDING good credit entries to your file. | | | | STEP 2 - Open a Passbook Savings Account |
| THE CO-SIGNER TECHNIQUE | | | | Go to the bank you've chosen and open a Passbook |
| All that is necessary to add years of excellent credit | | | | Savings Account for $1,000 or less---depending on |
| history is the love and trust of a friend or family | | | | what you have to work with. Take your Passbook |
| member who has good credit. | | | | home and wait a week or so, because you don't want |
| Credit card companies are always willing to have their | | | | it to look like you opened the account only for the |
| best customers add extra cards for family members. | | | | purpose of taking the loan. |
| By adding your name to one or more of their | | | | STEP 3 - Obtain a Passbook Savings Loan |
| accounts, they will actually cause a new credit card to | | | | Return to the bank and ask to see a loan officer. Look |
| be issued in your name. The "catch" is that they will be | | | | your best, be courteous, and explain that you wish to |
| the co-signer on the account, meaning that they are | | | | take out a Passbook Savings Loan for $850 (or 85% |
| responsible if you miss payments. | | | | of whatever amount you actually deposited). |
| Of course, you never want to risk the credit rating of | | | | When you take out your loan, your savings account is |
| a friend or family member, so simply have them use | | | | frozen. However, every time you make a payment |
| their own address on the application for the extra card. | | | | you unfreeze an amount equal to your payment, less |
| That way, the card will be mailed to them, and even | | | | a few dollars for interest. Be sure to ask that the loan |
| though it has your name on it, the card will remain in | | | | term be for at least one year, with minimum monthly |
| their possession. They can even cut it up if they want | | | | payments. Do not get a simple one-year loan with no |
| to. | | | | payments. This will not benefit you at all, because you |
| The simple beauty of this approach is that the new | | | | are trying to establish a history of payments. |
| card will show up on your credit report, and normally it | | | | You will not be turned down for this type of loan no |
| will show the opening date of the original card (not just | | | | matter what your previous credit history and in most |
| the application date for the extra card), as well as the | | | | cases it will not even be checked. If you have bad |
| entire credit history of that card! It's like getting years | | | | credit, make sure you tell your loan officer before he |
| of good credit added to your file with the stroke of a | | | | or she pulls your credit history. Tell the bank |
| pen. | | | | representative you are trying to re-establish your credit |
| THE PASSBOOK SAVINGS LOAN TECHNIQUE | | | | and that a good credit rating is very important to you |
| The "Passbook Savings Loan Technique" is a great | | | | now. |
| way to add positive payment history to your credit file. | | | | STEP 4 - Make Your Payments |
| It will also give you an excellent credit reference to use | | | | Assuming an interest rate cost of 6%, your monthly |
| for most types of financial applications. This technique | | | | payments on the $850 loan will be $73.16. (Remember, |
| does require some cash - at least $500 to $1,000. | | | | this is a secured loan, so the interest rate should be |
| However, this amount will be held in a savings account | | | | fairly low.) Since you have "borrowed" $850 in cash, |
| as loan collateral, and the total out-of-pocket cost to | | | | you will use that money to keep the payments going |
| complete this technique should be well under $50. | | | | on the loan. Be sure to make your payments well |
| Here is the Passbook Savings Loan Technique in detail, | | | | before the due dates. Always pay EARLY in order to |
| so you can see exactly how everything works. | | | | be on the safe side in establishing good payment |
| STEP 1 - Locate a Small Bank that Meets Your | | | | history. |
| Requirements | | | | STEP 5 - Pay Off the Loan Early |
| I recommend that you work with smaller community | | | | After six months, pay off the loan early. At this point, |
| banks and not the major chains. The smaller banks are | | | | you will have approximately $980 remaining from your |
| more likely to have the exact type of account that | | | | original $1,000 deposit, part of it as cash on-hand, and |
| you will need to open, and they are more likely to work | | | | some remaining in the savings account. You will have |
| with you and be flexible. Savings & Loan | | | | paid a whopping $20.31 in interest (assuming the rate |
| institutions and Credit Unions can also be used, | | | | was 6% for the secured loan). I'm sure you will agree |
| provided they meet the requirements. The product you | | | | that $20 is a small price to pay for adding six months' |
| want is called the "Passbook Savings Account," which | | | | worth of good payment history to your credit report! |
| is basically just a simple savings account. And the type | | | | STEP 6 - Make Sure the Loan Shows on Your Credit |
| of loan you will take out is a "Passbook Savings Loan." | | | | Report |
| This is the easiest type of loan to get because it is | | | | After you have paid off the loan, obtain fresh copies |
| totally secured with your own cash. Most banks are | | | | of your credit reports to verify that the loan payment |
| only willing to loan you 85% of the amount you have | | | | history is showing correctly. Since you selected a bank |
| on deposit, so there is always some reserve money in | | | | that reports regularly to the big three credit bureaus, |
| the account. | | | | everything should show up correctly. But mistakes do |
| Your target bank will be suitable for this method if it | | | | happen. If the loan is not reported correctly, then ask |
| meets the following three requirements: | | | | the bank directly to fix the omission, or ask the credit |
| A. The bank must have a Passbook Savings Account | | | | bureaus in writing to add the credit reference to your |
| product with NO MONTHLY FEE on balances of $500 | | | | report. |