We all deal with having to start our credit history from zero at some point in time. For me, it began when I was out of the country for 7 years. When I returned to the United States, I tried to apply for a credit card, only to find out that no one would extend me credit because of my lack of credit history. Apparently, no credit is even worse than bad credit.
It can take some people forever to build up a credit history, especially when you donat have a credit history to start with. But with a little knowledge and a little work, I was able to build up an excellent credit history in a short amount of time. I needed to buy a house and a car, and in order to do that, you need good credit. So, I was on a mission.
I began by calling come of my friends in the credit field, by searching the internet, even by reading books on the subject of lending. Using the knowledge I uncovered, I started to build my plan to bring my credit from nothing to the top 80% of debtors.
To build up a good credit history, you need to get someone to extend you credit. It sounds backwards, but with some planning and some cash, you can make it work. You have to start by allowing interest to accrue on your loan, otherwise, the creditor isnat going to make any money if you pay your bills off before interest collects, and they wonat positively report you for being a good debtor unless theyare making money.
To start, youall need to research the banks and credit unions in your area, and see who can help. Make sure you sign up with institutions that offer free checking - most banks do nowadays. To begin my credit building, I opened a checking account with one of the credit unions I found, and deposited $10,000. Once that was done, I asked the credit union to extend me a personal loan of $8,000, borrowed against the $10,000 I had just deposited. This froze the $10,000 so that I couldnat use it, but it would be released once the loan was paid back.
Credit union two was right across the street. I walked in with $8,000 and opened a new checking account. Again I asked for their help in establishing my credit and requested a loan for $7,000 against my $8,000 deposit. Off to the next institution depositing $7,000 and receiving a loan for $6000. Finally the last bank gave me a loan of $5,000 in return for my $6,000 deposit.
I was a little nervous. In less than six hours I had used $10,000 to take out $26,000 in loans. Was this going to work? I felt like I had just setup a house of cards and that one wrong step and the whole thing would come crashing down. I knew that the only way I could really keep tabs on the whole operation was to trust the online banking to make all the payments for me. And it did. everything went great. Because I paid off all loans in under eight months, I created a record of being able to pay an enormous amount of money each month on debt.
When it was over, I got a little over $8,000 back on my initial $10,000. The banks and the credit unions ended up with the rest of the money to cover interest charges, but I ended up with an excellent credit rating in a short amount of time, and I know have four credit cards, two of which carry limits of $25,000 each.
