debt

Step 3: Establish a third type of debt-Installment credit.

This step is assuming you have completed Step 1 and Step 2. The goal is to establish different types of revolving debt in order to build up your credit. The different types of debts, along with NO LATE payments will typically equal an improved or brand new credit score.

This type of credit is called installment credit and this can be typically done by applying for small loans.  Mortgages and car loans are installment loans. So if you plan to apply for one someday down the road. It’s a good idea to show the lenders some positive payment history with installment credit. A quick and easy way to do this would be to go to your existing bank and open a savings account let’s say for $500. Then open a secured line of credit of this savings account. Next, take this $500 line of credit and open a 2nd bank savings account at a different bank and then take the secured line of credit off this account and then open another account again at a different bank. The goal here is to have around three to five secured bank loans. While making payments on the interest on all the accounts, do this for about 6 months. Yes, this is expensive and you are paying high interest, however, credit built by paying interest and debt.

Also remember the company listed in step 2 can report as either an installment debt or revolving, simply by contacting them.

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