Is this the fastest and best way possible to establish credit?

Question

(I have 1 year of making my auto loan payments on time.)

1) I plan to take out a $500 secured personal loan from my bank for 6 months.

2) Then go to a different bank with the $500 and take out another secured personal loan from that bank for 6 months.

3) Repeat this once more at a third bank.

4) Establish a $300 security deposit account at my original bank to qualify for a secured credit card.

5) Repeat the process of getting a secured credit card at the next bank.

6) Repeat this once more at the third bank.

7) Obtain 2 more credit cards.

8) Pay back $500 secured personal loans from my banks in 6 months making all payments on time.

9) Use all 5 credit cards but never charge more than a maximum balance of 9% of the total credit card limit.

10) Pay off the statements as soon as they come and make all payments on time.

According to this FICO score estimator my resulting FICO score would be 740-790 in 1 year.

http://www.bankrate.com/brm/fico/calc.asp

Answer 1

This is not the best way to establish credit. The best way to establish trade lines is as follows:

1. Get 2 secured credit cards from a bank. Make sure the banks will not report the credit card as a secured card to all 3 credit reporting companies. After you receive the bill start paying the minimum payment on a bi-weekly basis by splitting the payment into half. National City is a good bank to apply for a secured credit card. This will raise your FICO scores immediately within 3 months. Also, do not go over 35% of the credit limit on each card. That is the threshold the algorithms allow to score your credit.

2. Take out a CD for $3,000 that pays interest. Go to the bank and get a secured loan for $1,500 against the CD. Pay it off in a year on time.

Doing these 2 steps will give you great credit. Also, a car loan from a bank not a finance company will also raise your scores higher. Auto manufacturers are not considered finance companies such as Chrysler Financial, Ford Motor Credit, etc. Also, remember that the banks when applying for the credit cards and loan will do a credit check although you are securing it with funds. This will lower the score in the beginning. Every 90 days you can have your credit looked at by a lender. Do not believe that anyone can pull the credit and count as 1 in 14 or 45 days. I have seen good credit go bad because of inquiries. Good luck.

Answer 2

Don't make this complicated.Open a savings and checking account and only work with 5 major credit cards. Too many loans look bad in loan officer's eyes.

Answer 3

Get a mastercard and purchase some thing for $5.00/month (or maybe with greenback volume you want) then pay it off immediately. you'd be taken aback what which will do for your credit. good luck!