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Additional Details
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**** | Will this work in raising credit score??? |
O.K. my friend told me to go to a small finance company and take out $300.00 loan in 48 hours exactly 2 days later go in and pay $200.00 on the loan. make sure they report to all 3 credit agency and it will boost my score alot of points. Is this true?? |
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doreen k
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More likely, it will lower your score.
The first hit to your score will come from the hard inquiry needed to approve you for the loan.
The second hit to your score will come from the fact that you're applying to a finance company. The type of lender and type of loan can make a difference to your credit score.
Worst type of lender (called a subscriber in credit bureau jargon) = finance company
Best type of lender and loan = mortgage lender/mortgage loan.
Paying your bills on time, having a mortgage and paying it on time, keeping older accounts open, and having a low debt to credit limit ratio are the best ways to earn a high credit score.
It takes time and discipline; there are no quick fixes. |
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SlimMick
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Not all finance companies report to the credit bureaus...and if they do they only report if you default. I don't think this is worth doing...and it's not worth the finance charge they'd charge you.
You'd be much better off by taking the money and getting a secured credit card and paying on time every month....Note: any increase in your credit score would be gradual....you won't notice any big jump in your score by paying just one payment on time. |
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src50
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Your friend is wrong. |
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KK
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No, it won't. Reporting to the agencies and it showing up on your credit report doesn't happen that quickly. |
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Jeff T
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Your friend simply doesn't know what he's talking about.
48 hours is not nearly enough time to build up credit.
Stop thinking of it as a numbers game, and start looking at your FICO score for what it is: a measure of your trustworthiness when it comes to repaying debts.
If you're looking to take out a 15 year mortgage, and the only thing the bank sees is that you had a 48 hour loan because you're trying to game the system, would that really look any different (from the bank's point of view) as someone who didn't have any loans?
Is 48 hours really enough time to establish your reputation?
I think you're just wasting your time, (and the money you'll get charged in interest) |
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Studly
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With all due respect for Jason's experience, I gotta disagree.
Everyone has pretty much picked apart this answer, and they are right. Going to a small finance company may not be the best source, as they may not report to the credit bureaus. So the first thing you need to do is verify they do. Otherwise your whole exercise is a waste.
The credit report takes your history on a monthly basis. The end result of your plan will be an open account with a $100 balance. This isn't like a credit card, and there is no "credit limit". All it will reflect is a $100 balance, and this will be applied across your whole report. No help here.
The biggest advantage is you are establishing a credit history. But unless it's over a period of 6 months, it will not be that much of an advantage.
The end result, it will boost your score, but only by a couple of points. It's not going to be a huge improvement at all. But it shouldn't hurt your score.
This sort of plan is best when you get the loan for an appliance or other item you can use, but might pay cash for. Instead, get the loan and pay it off ON TIME over 6 months. Then do it again!
Bank loans are given more importance on your credit report then credit cards. And they look better if a creditor pulls your whole report and actually reads the darn thing. |
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cdrates
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You should read this article on improving your credit score, http://www.monitorbankrates.com/how-to-build-maintain-and-repair-your-credit |
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txblueeyes
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Agree with Slimick.......the short loan you are talking about is just a pain in the rear.
Also,.....NOTHING raises your score ALOT of points. Only the bad stuff lowers.
Good credit is done by time & management.
good luck |
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Jason B
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This is bad advice you have been given for sure. Balance on a loan is not even a real issue in terms of credit scoring. If you pay the loan off early (which it seems you are suggesting) you take away what little benefit there was in the first place as when you pay it of the acount becomes closed and ceases to help you.
You are much better off getting a small credit card and using it wisely. You may have to start with a secured card. Whaetver you do don't default on it nor close the account.
Also small finance companies are the type that probably won't report to your credit anyhow, at least not to all 3 credit bureaus.
Rememeber, the credit scoring system is not made for you but to judge how much money can be made off of you so such "tricks" as you mention aren't going to get you very far. |
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