How To Repair Credit - Do It Yourself With A Passport Loan

After your financial problems are all behind you

, you're now faced with the challenge of rebuilding your file and raising your FICO score. While you'll come across many great strategies when learning how to repair credit, it's important you don't overlook adding a positive payment history to your record. When you do it yourself, one little known strategy you must check out is the use of a secured passbook loan. These type of loans do a fantastic job of showing potential lenders your responsibility with installment debt.

In order to get a passbook loan, all you need to do is deposit money in a blocked CD or savings and request the bank give you a loan against it. To secure the loan, you'll be required to surrender your passport and ATM privileges.

As you learn how to repair credit, you'll find not all banks offer these type of loans so you may have to do some research to locate a bank that does. If you can't find a local bank willing to offer a passport loan, a personal loan will do the same thing. You may be required to provide a co-signer or collateral to guarantee the loan.

Whichever loan you end up applying for, be sure to check out these important features when you do it yourself:

1) Reports To The Credit Agencies

Make sure the bank reports your payment history to the bureaus. That's one of the major reasons you're taking the loan out in the first place. If the bank doesn't report to the bureaus, move on to the next bank.

2) What's The Minimum Deposit?

Ask the bank what's the minimum amount required to open an account. Minimum deposits can start from as little as $50 to as high as several thousand dollars. Find one that fits your budget. If you can afford it, a one thousand dollar passport loan will do wonders to raise your score.

3) Know What The Interest Rate Is

With a history of bad credit, you should expect the interest rate to be higher. The interest earned on your deposit will be nominal compared to the interest you'll pay to get the loan. You may question the cost effectiveness of passport loans, but the results to your FICO score make it well worth it. Remember, there's always a price to pay when you have bad credit, but the good news is that with the proper do it yourself steps, you can achieve great results.

4) How Long Is The Term?

The installment period for these type of loans range from one to five years. For maximum results and minimal costs when you do it yourself, select the one year term. This keeps your total interest payments down to a minimum but effectively builds your score.

5) How Much Can You Borrow?

With passbook loans, expect to only borrow up to 80-95% of your deposit amount. You'll have a tough time finding a bank to loan you 100% of your deposit.

A passport loan is an underutilized but effective strategy to use when you learn how to repair credit. Make your payments on time and watch your score dramatically improve over time.

by: Bobby Tan

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