Improving your credit score

[al77]

I have read about this recipe:

1. Have two bank accounts in different banks.
2. Apply for a loan at a first bank. Get a loan of $1000.
3. Deposit it at the second bank.
4. After a day get $1000 from bank 2 and bring it to bank one to pay off the loan.

This sounds simple and in fact a bit naive. But does it work?
What do you guys think?

 

[Docs]

*bump*, Also interested.

 

[penkitten]

Originally posted by al77
I have read about this recipe:

1. Have two bank accounts in different banks.
2. Apply for a loan at a first bank. Get a loan of $1000.
3. Deposit it at the second bank.
4. After a day get $1000 from bank 2 and bring it to bank one to pay off the loan.

This sounds simple and in fact a bit naive. But does it work?
What do you guys think?

i heard you take a hundred dollars and start a savings account. then you get a secured loan for a hundred dollars and they freeze your account until its paid off in payments of about 25 a month.

then you take that hundred bucks and go to a second bank and do the exact same thing.

if you pay them off the next day, it does not establish that you can make monthly payments.

 

[al77]

Re: Re: Improving your credit score

Originally posted by penkitten
i heard you take a hundred dollars and start a savings account. then you get a secured loan for a hundred dollars and they freeze your account until its paid off in payments of about 25 a month.

then you take that hundred bucks and go to a second bank and do the exact same thing.

if you pay them off the next day, it does not establish that you can make monthly payments.

Yes, most likely they'll want a secured loan. But I can simply get cash from my credit card, this will be also considered a loan I think.

You are right about monthly payments. But at least this should somehow improve my credit - it shows I can pay the loan in time.
And it will cost me nothing practically, if they don't have any loan fees or somehting like that.

$100 is too little I guess. But maybe this is enough.. who knows?

In fact at some point of time I am going to do that anyway: it sure will not hurt my credit score.

At http://www.myfico.com/ you can pay $8 a month, and they send you your credit score each month! Thats not bad I guess for my future experiment. Oh.. not $8. they want at least $24 for three months...

 

[al77]

Re: Re: Re: Improving your credit score

At http://www.myfico.com/ they say:

For a $216,000 30-year, fixed rate mortgage:
FICO® score interest rate your monthly payment is:
760 - 850 5.85% $1,275
700 - 759 6.08% $1,306
680 - 699 6.25% $1,330
660 - 679 6.47% $1,361
640 - 659 6.9% $1,422
620 - 639 7.44% $1,502

So the savings could be quite substantial.

 

[penkitten]

al try the 100 at two banks and watch your credit score grow in the couple of months you pay it off very slowly.

then if you want, heck go do a bigger loan.

start small and think big , dont put too much on your plate.

i went to a seminar a few years ago and did this and it really gave me a good start on credit.

 

[Page]

Russ Whitney talks about this type of loan juggling thing, although I have yet to try it.

 

[penkitten]

i went to the russ seminar

yet i didnt get into the real estate that he talked about

i was able to get a dang good home loan for myself.

 

[STR8UP]

Originally posted by penkitten
i went to the russ seminar

yet i didnt get into the real estate that he talked about

i was able to get a dang good home loan for myself.

You went to the Russ seminar or the Russ sales pitch?

I went to the sales pitch but the only thing I have ever bought by him was the book Building Wealth, which is where the credit idea comes from.

Keep in mind that this principle also applies to other things in a similar way. The same way that you are rolling money from one bank to another to give them security for a loan, you can also borrow and roll money when buying assets. For example-

The townhouse I am living in I am buying. I had to put $30k down. I expect to receive a check BACK TO ME for $30k at closing and the seller is going to owe me $5k. So basically, I am being PAID $5k to buy this place. I won't go into the details with this, but next week I am buying a couple more condos that require $2,500 down each. Guess where the money is going to come from? You guessed it......the excess that I borrowed on my primary residence. Borrow from bank A to provide security interest for bank B to buy an asset. As long as you make more than you spend, you have discovered one of the secrets to becoming wealthy in a short time.

I use this on a daily basis and if you are able to grasp this concept of rolling money and utilize it you are truly "in the know" when it comes to money.

 

[STR8UP]

Re: Re: Re: Re: Improving your credit score

Originally posted by al77
At http://www.myfico.com/ they say:

For a $216,000 30-year, fixed rate mortgage:
FICO® score interest rate your monthly payment is:
760 - 850 5.85% $1,275
700 - 759 6.08% $1,306
680 - 699 6.25% $1,330
660 - 679 6.47% $1,361
640 - 659 6.9% $1,422
620 - 639 7.44% $1,502

So the savings could be quite substantial.

I had to transfer most of my revolving (credit card) debt onto my parents equity line temporarily to get my credit score from 700 up to 750. If I had not done this, I would end up paying several hundred dollars per month more on my primary residence. Lets see...if I own it ten years that probably saved me $35k. Not bad for shuffling some paper, eh?

 

[STR8UP]

Re: Re: Re: Improving your credit score

Originally posted by al77
Yes, most likely they'll want a secured loan. But I can simply get cash from my credit card, this will be also considered a loan I think.

EXACTLY!

If you learn how to harness the power of this you can use it to make millions, no joke.

If you are building credit to eventually use it to buy assets, you will find that making the payments on the borrowed funds will be covered by the profit from the asset. Even if it has to come out of your pocket (or even borrowed from another scource) as long as you MAKE MONEY when all is said and done that is all that matters.

I hope everyone is listening here, because this is one of the tools I use to create wealth. It is truly an amazing concept.

 

[Docs]

Originally posted by STR8UP
You went to the Russ seminar or the Russ sales pitch?

I went to the sales pitch but the only thing I have ever bought by him was the book Building Wealth, which is where the credit idea comes from.

Keep in mind that this principle also applies to other things in a similar way. The same way that you are rolling money from one bank to another to give them security for a loan, you can also borrow and roll money when buying assets. For example-

The townhouse I am living in I am buying. I had to put $30k down. I expect to receive a check BACK TO ME for $30k at closing and the seller is going to owe me $5k. So basically, I am being PAID $5k to buy this place. I won't go into the details with this, but next week I am buying a couple more condos that require $2,500 down each. Guess where the money is going to come from? You guessed it......the excess that I borrowed on my primary residence. Borrow from bank A to provide security interest for bank B to buy an asset. As long as you make more than you spend, you have discovered one of the secrets to becoming wealthy in a short time.

I use this on a daily basis and if you are able to grasp this concept of rolling money and utilize it you are truly "in the know" when it comes to money.

I take it this is a American thing, or can it be applied in Canada as well, I wouldn't mind making a few extra dollars, expecially from buying a house in the near future. Can you explain to me how you set yourself up for it, is it a bank thing that allows for your 5k, or a seller/dealer tradeoff, or something else?

Sorry to ask.

edit: Sorry, You'll have to talk slowly about credit and loans, I'm new at this.

 

[STR8UP]

Originally posted by Docs
I take it this is a American thing, or can it be applied in Canada as well, I wouldn't mind making a few extra dollars, expecially from buying a house in the near future. Can you explain to me how you set yourself up for it, is it a bank thing that allows for your 5k, or a seller/dealer tradeoff, or something else?

Sorry to ask.

Keep in mind you aren't MAKING a few extra dollars, you are BORROWING a few extra dollars. You will have to pay this back but it's not that it is borrowed it is what you do with this borrowed money that matters.

If you use this overage to take a vacation, you might have a good time and feel rested, but you still have to pay back that money plus interest. If you use that money to buy an asset that makes you more money than the interest you are paying on the loan, you come out ahead. ONLY USE THIS EXTRA MONEY TO BUY SOMETHING THAT WILL MAKE YOU MORE MONEY!

Don't know about Canada, but I know everyone is going to ask so I might as well explain it.

It's really pretty easy. All I had to do was write the sales contract for an amount 3% higher than I actually wanted to pay and then get the seller to kick back 3% to me towards closing costs. Pretty standard that banks will allow the seller to pay up to 3%.

Now, if my closing costs were actually 3% I would walk away even up. But since the closing costs actually ended up being LESS, I pocket the difference. The seller is going to have to cut me a check outside of closing to accomplish this because the bank won't let you physically take a check away from the table with you when buying something.

This is just one of those funny rules banks have that make little sense, because that same bank that would sooner open their vaults to the public once a week than let you walk away from the closing table with money but may very well turn around and give you a credit card the next day, but we have to play the bank's game nonetheless.

 

[Docs]

The townhouse I am living in I am buying. I had to put $30k down. I expect to receive a check BACK TO ME for $30k at closing and the seller is going to owe me $5k.

Why does he owe you 5K? Also, how come you are getting 30K back if you're buying the house? (sorry, I'm lost slightly)

 

[ethnomethodologist]

Re: Re: Re: Re: Improving your credit score

double post, I'll probably put something more useful here in the future. Here goes a joke, actually no, I'll try and respond by tomorrow morning about how money=women. Hey I remember... the equation of why women are evil, to an AFC.

women=time x money

time=money

money=root of (all) evil

substitute time with money

women=money squared

therefore

women=evil

as we all know though, being DJ=women, and a DJ should have lots of time, and lots of money.

so after all that

DJ=lots of evil

please ignore money=evil being wrong

 

[ethnomethodologist]

Originally posted by al77
At http://www.myfico.com/ they say:

For a $216,000 30-year, fixed rate mortgage:
FICO® score interest rate your monthly payment is:
760 - 850 5.85% $1,275
700 - 759 6.08% $1,306
680 - 699 6.25% $1,330
660 - 679 6.47% $1,361
640 - 659 6.9% $1,422
620 - 639 7.44% $1,502

So the savings could be quite substantial.

What I don't understand, if I am doing the math wrong, please correct me, is why are you GIVING THE BANK SO MUCH MONEY? $540k from a 216k loan at the low range of the score, and $460k from the same loan at the high end of that list. Actually, just one step up over each of the pivot points, you pay $10 grand more after all the years between a rating of 759 and 760. If I had 10 grand, I could triple it in ONE month, no joke. I'm thinking I need a business partner, I am so glad this money talk finally didn't piss me off.

Originally posted by STR8UP
I had to transfer most of my revolving (credit card) debt onto my parents equity line temporarily to get my credit score from 700 up to 750. If I had not done this, I would end up paying several hundred dollars per month more on my primary residence. Lets see...if I own it ten years that probably saved me $35k. Not bad for shuffling some paper, eh?

I don't understand WHY STR8UP would have to transfer his debt ONTO his parents line, bad grammar, is my guess. I understan the rest though if I catch his drift, that he saved his credit line, by giving the bank a new source to feed off of, and thus saved himself more money.

Originally posted by Docs
I take it this is a American thing, or can it be applied in Canada as well, I wouldn't mind making a few extra dollars, expecially from buying a house in the near future. Can you explain to me how you set yourself up for it, is it a bank thing that allows for your 5k, or a seller/dealer tradeoff, or something else?

Sorry to ask.

edit: Sorry, You'll have to talk slowly about credit and loans, I'm new at this.

Same goes for me three fold, I am canadian as well, so I don't know if it works here as well. I don't know anything at all about seller/dealer tradeoffs in this sense. Used to be a business man of sorts in my younger days, but we had completely different terminology in the slave trade business, oops did I just say that out loud?

Not saying sorry, I am not going to lie, I could probably open a few markets up for you. Gotta ask niceley though, and tell me how to do it fast and hard, I don't want the money to take too long to get into our hands.

Plus I live paycheck to paycheck, so a nice kick in the pants would proably do me some honest to goodness.

 

[Page]

Originally posted by Docs

Why does he owe you 5K? Also, how come you are getting 30K back if you're buying the house? (sorry, I'm lost slightly)

This is cash at closing. The best part of deal making is THERE ARE NO RULES, AND YOU HAVE AS MUCH (SOMETIMES MORE) POWER TO SET THE TERMS OF THE DEAL AS THE OTHER PERSON. If I understand the situation correctly, you can arrange to have cash paid back to you from the seller when you buy property. A lot of buyers never think of asking, but if the seller wants the deal to go through badly enough he will probably be willing to accept any reasonable requests for cash you will make. (it helps if the property needs some work, b/c you can use the future cost of repairs to help justify the cash at closing. This way, you can walk away with a few thousand. )

see how this works?

 

[ethnomethodologist]

Wow, I just keep thinking about this... are any of you that replied any good at all with women?

Can we all cut the semantics, and speak the same language. Preferably women, so I can understand, and hopefully speak to you in a language you aren't so smooth with?

 

[STR8UP]

Originally posted by Docs
Why does he owe you 5K? Also, how come you are getting 30K back if you're buying the house? (sorry, I'm lost slightly)

Sorry, I should clarify.

My mortgage is 100% LTV, meaning zero down. That coupled with the fact that the price was raised 3% (keep in mind that it still has to appraise for the bumped up amount) and then the seller refunds me the actual closing costs at closing and then after closing still oses me the difference between the 3% and th actual closing costs (approx $5,000)

 

[STR8UP]

Originally posted by ethnomethodologist
I don't understand WHY STR8UP would have to transfer his debt ONTO his parents line, bad grammar, is my guess. I understan the rest though if I catch his drift, that he saved his credit line, by giving the bank a new source to feed off of, and thus saved himself more money.

OVER to.

I transferred it OVER to my parents credit line which is a mortgage so it is not revolving (their credit isn't drastically affected) to get it off of my credit cards (which absolutely RAPE your credit score if your debt is high in proportion to your available credit).

This basically allowed me to raise my credit score "artificially" within a period of a few weeks in anticipation of closing a $540,000 loan.

Stick with me kiddies, you might learn somethin'