Rebuilding Credit Question

**AprilP** · 06-04-2008, 05:47 PM

Ok. Here's the deal. I'm currently debt free, HOWEVER, from past mistakes and sneaky ex-husb, my credit is awful.

Pretty much everything on there is bad. I have one car loan that I paid off last year, that's basically the only good thing on there.

My credit union has pre-approved me for a $2,000 personal loan. Some co-workers have suggested that I go ahead and take the loan, don't use it for anything, but make 3 or 4 regular monthly payments, then pay off the entire loan. They said that will help my credit rating, and give me another "good" mark on it.

They also suggest I do this more than once. Like once this year, again next, etc.

You guys know WAY more about this than I do, what do you think?

**Dancing Lotus** · 06-04-2008, 06:31 PM

I don't know but I don't think making only three or four payments will be enough to help. I would get a credit card with a low credit line and use to pay for your groceries or gas only and pay it off in full every month.

**Ilovesewing** · 06-04-2008, 07:45 PM

What's the interest rate on the personal loan? I checked on one once through my credit union and it was ridiculously high. And I have good credit! If I remember correctly it was about 22%. No way would I get a loan at that rate. Did they give you a rate?

**Palooka** · 06-04-2008, 10:52 PM

Originally Posted by AnnK

I don't know but I don't think making only three or four payments will be enough to help. I would get a credit card with a low credit line and use to pay for your groceries or gas only and pay it off in full every month.

Yep, I agree. Just something that you would charge that you know for sure that you will be able to pay off.

Also whatever you do...do not close the account down if you think you are finished with it. It will not show up on your credit as a good report.

**Drgnfly423** · 06-04-2008, 11:18 PM

Personally, I would not get a loan with a balance. I would get one credit card and charge small amounts and pay them in full every month, like Ann originally said.

**Bournecrazy** · 06-05-2008, 09:02 AM

if you do get a loan, get the smallest they will offer and dont spend the money just use it to pay it back you need a good 12 months to improve your credit history, and everything stays on file for 6 years what ever it is good or bad.

i am trying to improve mine at the momen i have a CC i am just using for little things and paying in full every time i make a purchase.

**IntlMom** · 06-05-2008, 09:16 AM

Well, getting a credit card and using it each month and paying it off each month will help your credit, no doubt. The same can be said for getting the loan and paying it back.....
just be careful (I'm sure you will be, I'm just saying........)
Good Luck!!!!

**FrugalMomof3** · 06-05-2008, 09:25 AM

Ive heard about something like what your trying to do but take into consideration the interest you will be charged.

Even if the loan is $2000 and you pay it off within a few months (thus not actually spending the $2000 loan and possibly putting it into a high interest savings acct. such as ING). If the interest rate your being charged is high, you will actually still be paying out some money which is really a waste of time and money.

Why not get a credit card since there is a grace period, thus no interest charges.

**AprilP** · 06-06-2008, 05:27 PM

The rate on the loan is 12.75. I can't get a credit card. Believe me, I've tried. The term of the loan is 12 months. On a 2000 dollar loan, I'll only be paying back 2136 if I go the whole 12 months. I think that's a fair amount, particularly for someone with my horrid credit.

The last time I tried to get a credit card with one of those "second chance" places, the interest rate the offered me was 27 percent.