Step3: Establish a 3rd type 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 typically be done by applying for small loan. 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 and then open a secured line of credit off this savings account. Next take this $500 line of credit and open a 2nd bank savings account at a different bank and then take secured line of credit off this account and then open an another account again at 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 your paying high interest, however credit is 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.
