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A Quick Guide To Rebuilding Installment Credit

Once you’ve reestablished revolving credit, it is time to take look at establishing installment credit such as a car loan or personal loan. This will be more difficult than establishing revolving credit, but it can be done even with bad credit if you work slowly and deliberately.

Getting A Signature Loan

The strategy for rebuilding installment credit is to seek out small private banks in your area. Most banks will allow you to make a deposit and take out an installment loan (often called a signature loan) against the deposit. The interest rate is usually 2% above what the bank is paying you on the deposit. Simply make payments on this loan for more than 12 months and presto! You have established installment credit.

Leveraging The Signature Loan To Rebuild Installment Credit Faster

If you want to leverage this method, then make the deposit in Bank A (as set out above), take out a signature loan and deposit the loan proceeds into Bank B. Then take out a signature loan from Bank B and place it in Bank C. Take out a signature loan from Bank C and put the proceeds somewhere safe (like Bank A!!).

Make payments on all three loans (at least six months) then pay all of the loans off. When you actually apply for real credit later on, you will have three bank credit references that will show the loans as being paid “better than agreed.”

That is the best entry you can have on your credit report.

Rebuilding Installment Credit Can Be Done With Patience

Nobody said repairing credit would be easy. It takes time and self discipline. However, if you work diligently and follow the steps outlined here, you can rebuild your credit history over time.

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