Question:
have you used this method of building credit?
if so how did it effect your credit?
Is it better to start with a small $500 cd and work my way up every six months?
example: $500 cd then $1000, then $2500, then $5000, then $10,000 ( every six months)?
or just start with a $5000 cd? (6 months or a year)
Thanks
~ building credit and repairing credit is like another job.
Answers:
I built credit by borrowing against a CD using 2 ways. The first way was I borrowed $2000 on a secured CD loan for 24 months. I took the proceeds of the loan and placed them in another CD that matured in 12months. After 18 months after paying off the CD then I opened a Citi Secured Credit Card in which the security deposit is linked to a CD that earns 4% interest. I aggressively added to the CD as much and as often as I could until I was able to reach the maximum allowed ($25,000) and then after 18 months, the card converted to a regular card and I renewed my CD with citi earning the same amount of interest
It really doesn't make a difference. Your assets are your assets. My best advice for building credit is to have as much credit limit (on credit cards) as possible. Then don't use that limit. This will reflect on your credit report as a low amount of bankcard utilization.
Im not even sure having cd's will help build credit at all. It may just make creditors feel more comfortable in loaning you money because of your assetts.
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