While talking to a friend of mine about our credit score I found that even though she and her husband had always tried to keep their credit score in a higher bracket, they had dropped below what is considered "good" because of a late payment on some bills. It wasn't because they didn't have the money but because she was hospitalized and during this time the bills were forgotten. Even though they explained why the bills were late it still caused their credit score to drop. The credit score companies don't accept excuses.
So I suggested that they take out a small loan at their bank.
She cocked her head to one side, gave me a strange look, then asked, "Now why would we want to do that? We don't need a loan."
Okay I guess you are wondering why I said that too. Well let me explain...
When you borrow money from a bank and pay off the loan before it is due, they report your prompt payment and it raises your credit score.
But what if you don't have any money to spare and your bank wont give you a loan? Here is what you can do...
Borrow, beg or sell something worth at least $50, $100 if at all possible.
Open up a savings account with this money then use it as collateral to secure a loan from the bank. Either the same amount you have in the account or less. Never ask for a loan that is more than what you have in the account. Just before the payment on the loan is due you use the money in the savings account to pay it off. Do this at another bank, and another until your credit score reaches the excellent mark. No doubt you will now be able to secure a loan with almost any bank without any collateral, as long as it is a reasonable amount. Never take out a loan of any size if you can't make the payments on time.
