One of the big challenges many face on the road to building (or rebuilding) good credit is establishing credit in the first place. If you have no credit history, it may be tough to get that first credit card or loan. It is even harder to get a second chance in the world of credit if you have had bad credit in the past (especially a bankruptcy or a foreclosure). The good news is, however, that bad credit does not have to follow you for the rest of your life. You can take steps to rebuild new, positive, credit and a healthy credit score.
We have discussed the concept of secured credit cards as an excellent option for rebuilding credit. Another tried and true method is taking out a loan at a local bank or credit union and utilizing a savings account or certificate of deposit as collateral (making it a no risk proposition for the bank).
I have navigated the world of credit both personally and professionally. A book I co-authored, Credit Scoring Secrets, continues to be a bestseller at Amazon. Even after going bankrupt (and losing my home to foreclosure) as a result of my accountant embezzling nearly two million dollars from me, today I am proud to have a credit score of over 800. Using secured loans and credit cards does work... I have seen it work hundreds of times (including in my own journey of credit restoration).
Lending Circles - A New Way To Boost Your Credit Score
The concept of lending circles is not new. In fact, it is very popular throughout the world and has only recently found its way into our culture here in the U.S. The idea is that a group of individuals get together and agree to participate in a circle of lending (hence the name lending circles). Each participant in a circle agrees to make a monthly payment. Participants take turns receiving the proceeds of a zero interest rate loan which is funded by the other members of their circle. The loan amounts are typically small, and are repaid over the course of a year or less. The lending circles are organized and administered by the non-profit Mission Asset Fund, based in San Francisco. You can find out if an affiliated lending circle program is available in your area by simply doing a search on their website using your zip code. It is interesting to note from their website that the average participant in a lending circle has a 168 point increase of their credit score.
How Lending Circles Boost Your Credit Score
Unlike an informal loan among friends, Lending Circles report participants' payment history to the major credit bureaus. This means that despite a non-existent, or even bad credit history, making new on-time payments within a lending circle will quickly get your credit score moving in the right direction.
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