Credit Advice

Have a question? Have advice to share? The combined knowledge and experience of everyone in the Credit Karma community can help you. Enter your question or help others below to get started!

Question

Posted in Credit Scores
Profile Image

Question By
champ989

3 Contributions
1 Person Helped
Will borrowing against a CD I opened improve my credit score?
Long story short trying to get a house.

I was told if I opened up a CD and borrowed a loan against it (slightly confused on that, but don't worry about the details) it would improve my credit score. Only problem is it's going to tie up my downpayment for the house for 6 months while I pay it off. So I'd only want to do it if it would help my credit score thus lowering the interest on the mortgage and make it easier to get a loan.

I've had a secured credit card for just under 2 years (greatly improved my credit score)
I've paid off all my collections that I could (One Capital One credit card still remains, they'll take a 'donation' but will not remove it from my credit score)... Sooo I'm not paying.

Credit Karma's scores are 690 and 691 but my FICO score is 621 (I want at least 640, so I just need a bit more to get over the hurdle) P.S. for some reason credit karma doesn't have the Capital One card on my credit score anymore, but it's still on Equifax.

Just for giggles I disputed the capital one claim on Equifax a few times, no luck obviously.

And if anyone else can think of a better way or any way to improve my score I'm all ears. Thank you! :)

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW
All Responses

Results 1-3 of 3Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
Top Contributor
38 Contributions
9 People Helped
Most Helpful Response

CD

Helpful to 1 out of 1 people

Opening a cd account and borrowing against it. Basicly what your doing is borrowing against your own money with paying interest to the bank at a smaller interest rate. But cd's right now aren't paying enough to balance that kind of loan.

Best thing to do is talk to a loan officer at the bank which you bank at. Use as much money as you can for a down payment on a home. You should also find out how much home you can afford as well. Most people get over their head thinking they can buy more house than they can afford. Remember you will also have to pay home owner insurance as well as flood insurance when purchasing a home. This is an added cost most people don't think about as well.

Making plans to buy a home is a big step. You will also want to think about how you want to finance a home and save money in the long run. Buying a home at 30 year morgage I would never recommend unless you like giving money away. Think about the terms as well as they payment that you can pay.

Top Contributor
5038 Contributions
1131 People Helped

Helpful to 1 out of 1 people

I believe what you are referring to is a Secured Loan. See if you can find a Secured Loan for a small amount. Just make sure that the lender reports to all three credit bureaus before applying. If you only have one credit card right now, you should get another one, even if it has to be secured, but I highly doubt it would need to be, you should be able to get an unsecured credit card now. A second credit card will give you a score boost at least with fico scoring. I would get the second credit card before getting the secured loan, but you should do both. You can probably find a secured loan for five hundred dollars or maybe even less, so search around.

____________________________________________________________________________________________________________________________

Make sure that you have the current credit card paid down to below ten percent of the credit line if you don't already. Don't dispute the Capital One account anymore as when you dispute the account updates and looks like a recent derogatory on your credit. You can try sending "goodwill letters" but it would be tough to get Capital One to agree. Be aware that you can most likely get another credit card with Capital One as they do not hold grudges. Check their website to see if you are preapproved for an Unsecured credit card with them for the second card that you need to add.

3 Contributions
1 Person Helped

I don't mind about losing a couple dollars in interest, I'd save more with a better rate on a house. I decided to go with the secured loan, I'll post back in 6 months if it does or does not improve my credit score.  As far as a credit card, I have two inquires on my credit report already and I'd rather not get a third... Unless that wouldn't lower my score by more then a couple points, then I don't suppose I'd mind (I do like those Discover IT / Chrome cards).  I keep less than 10% on my credit card every month, haven't missed a payment since I got it almost 2 years ago. 

On a side note I have used several home affordability caculators, they say I can afford 160,000 house, but I'm only looking for 130,000 max.  As you said, I don't want to come up short.  I also am looking for the 15 year mortage, its not much more per month.

Thank you both! :)

Results 1-3 of 3Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Reply to this Question

Write your response:
Enter Your Comments

The Credit Advice pages of the Site may contain messages submitted by users over whom Credit Karma has no control. Credit Karma cannot guarantee the accuracy, integrity or quality of any such messages. Some users may post messages that are misleading, untrue or offensive. You must bear all risk associated with your use of the Credit Advice pages and should not rely on messages in making (or refraining from making) any specific financial or other decisions.