Using Unsecured Credit Cards as Secured Loans

In trying to quickly raise credit scores, many card holders are creating their own secured loans to manipulate scores in their favor.  Apparently, by making a large purchase on your credit card, one that would be about 80% of the credit limit, it will initially drop your score about 6 points.  However, if that purchase is paid off in full within a month’s time, then the score can raise around 12-20 points.

This process can be used several times over the course of three months to get a nearly 60 point boost in your FICO score using your credit card just like secured loans are used.  This would mean that the card holder should have the amount for the complete purchase in their bank before they make their purchase.  The funds would need to be committed to the purchase.

Then the card holder would use their credit card, make the purchase and wait at least two weeks to simply pay it off in full.  Because of slow reporting, the effects may take the entire month to register.  Secured loans work in roughly the same way, but with a larger initial loss in score and then a greater increase as it is slowly paid down.

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