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Thanks Ottawa, I do have some outstanding, I believe it to be less than $1400, but I'm awaiting my credit report to find out exactly. I think I'll put $1200 towards paying these off.

For defaults older than 2 years, is there no point to settling them? They won't show as "paid"?

I'm thinking of opening 2 GICs:

One for $3300 to get a secured CC card against, hopefully at a small credit union willing to take a "chance" with me (any suggestions? I'm in Toronto, if that matters)

Another for $500 to get a secured loan. I'd deposit the SL into another GIC at another financial institution and take a third GIC out and hold on to it, using it to help pay my loans over the year.

This way, if I can find a CU or someone willing to extend a secured card against a GIC, I'd have 3 credit lines with 3 institutions in good standing over the course of the year. Plus $1200 in settled debts (which MIGHT cover them all) That should do well, no?

Any other suggestions? Thanks, btw.....

And to footloose, I know very little about credit, but no I certainly don't understand that. That sounds like precisely what you said. The good day/bad day factor....... can't imagine what else it could be.......

MudMoney, something you didn't indicate is whether or not you still have outstanding balances on those defaulted accounts, and, how long ago you defaulted on those accounts.

Here's the thing... If the defaults are recent (within a couple of years or so), then you might be able to benefit from settling those accounts with the creditors - as that would at least have your reported accounts updated as PAID or Settled on your credit file. Afterwards, you could try approaching a bank for a secured card using a GIC as collateral.

I recall when I obtained my first Card with Canada Trust (now TD) I used that strategy with a $1000 GIC. I let them hold it for a year, kept the account in good standing and the GIC was later returned to me afterwards.

Just an idea to ponder. Every situation is different, and, when I deployed that strategy it was ~19yrs ago. Times have changed since then, so some variables may differ today, however, when one thinks about it: The risk the bank is taking is next to nil, so... It could very well still be worth a shot.

Your plan of action as you so carefully detailed in your thread is plausible and can work, however it has been my experience that it depends on the bank/credit grantor you are dealing with, the individual who is reviewing your file or application and whether he/she is having a good/bad day. Two people can review the identical application for a loan or a credit card and one will accept it and one will reject it. This is called a "gut reaction". We all have it and sometimes we're right and sometimes we're wrong. Let me give you a personal experience I had recently.

My credit score is excellent and has been for some time. All my loans and credit cards are current and I have never missed a payment or made a late payment.

In April 2009, I received an unsolicited offer from RBC (Royal Bank)
in the mail offering a Platinum card for $5,000 with an introductory rate of .9% for 9 months after which the rate would go to 19.50% thereafter. I didn't really need another card ( I didn't own a RBC card at the time) but I decided to complete the application and mail it in and see what happens. Within 2 weeks, I received a letter from RBC saying that they couldn't issue me a Platinum card but could offer me a basic Classic card for $1,000 with an introductory rate of .9% for 9 months on cash advances and balance transfers ( but not purchases ) after which the rate would go to 24.50%. If I didn't want the basic Classic card, they would cancel the application. I decided to accept the card and received it shortly thereafter.

I then decided to take a cash advance each month ranging from $700 to $900 and repaying it in full 2-3 days before the statement date at the local RBC branch, thereby minimizing any interest cost. I did this for 9 months after which no monies were owing on my card. At no time did I incur an interest charge of 24.50% but always .9% on my cash advances. When I took the cash advance, I deposited it in my credit union account until I repaid it by withdrawing the funds from the credit union account. Over the 9 months, I incurred a small amount of interest on the cash advances which I paid.

In April 2010, ( 1 year later ) I contacted the RBC credit card department and requested that they reduce my interest rate to at least 19.50%. They refused. I then asked them to increase my credit limit to $2,000. They refused. I then asked them to issue me their low-rate card which they offer at 11.99% for an annual fee of $20. They refused. I still have their original card that they sent me but I don't use it. This one's a "head scratcher". Just last week, I received a letter from MBNA offering me a 1.99% balance transfer rate on my card valid from August until my billing date in October 2011 at which time it will revert back to my current rate. Can you figure this out because I can't?.

Good Luck and have a GREAT DAY

GICs and Secured Loans to Build Credit??

Hi All,

Quick background: I have horrible credit so I will not be accepted for any credit card anywhere. I have even burned Capital One – so even they’re out of the question.

Funny enough, all my outstanding debts total less than $1500 (I believe, I’m waiting for my credit report to re-verify) – so my infractions were never of a high cost, but they were deliberate and stupid, and I can’t blame anyone but me.

OK, that said, I have $5000 of cash. I’m trying to find the best way to leverage this to begin building credit, especially to get a credit card, but not limited to getting a credit card.

As I’ve said, Capital One will not extend a secured card to me anymore, and I accept full responsibility for that. As far as I know, if Capital One will not allow you a secured card, you’ve burned your last bridge in terms of getting a secured credit card that reports to the major credit bureaus and can help rebuild your credit (NOT a debit card that lets you spend your own money WITHOUT building a credit rating or a card that reports to “alternative” agencies only).

If I’m wrong on this, and there is still somewhere I can get a secured card with my $5000, please let me know.

Now, what a friend suggested is what I can only call a “scheme” (both harmless and legal) by which he CLAIMS to have gone “from zero to hero” with the banks. He didn’t start at R9 like me, so that may be a huge distinction. He started at zero, literally, AND as a student.

His Story:

Anyway, he claims he took $5000 (it wasn’t actually 5000, but for the sake of consistency with my own situation, let’s say it was) and deposited it into a GIC with his bank, then IMMEDIATELY (as in, on the spot, right after depositing it into a GIC) asked for a secured loan against the $5000. Naturally, they granted the loan. He took the loan for two weeks and paid it a day early. He claims he went back about a month later and did the exact same thing, taking a two week loan and paying it promptly. He claims he did this for 6 months or so and then asked the gentleman he’d been dealing with at the bank to extend a $6000 (including $1000 of unsecured credit) loan on his $5000 GIC. He claims they did and that he paid it back promptly and kept doing this until he was getting more in unsecured loans than he was in secured loans.

He then started asking for small unsecured loans WITHOUT asking for any secured loans along with them and continued paying them back responsibly until he was getting larger and larger unsecured loans. He never spent the money on anything, simply put it in another bank account at another bank and then repaid his loans a day or two early. He said when they started offering him $10,000 in unsecured loans (he claims this happened within a year), then he asked for a credit card application and got approved for an unsecured card, based on his borrowing history. He then asked for a line of credit a few months later and had no trouble in getting a $10,000 line of credit.

I know this guy well and would describe him as pretty damned honest. I don’t believe he’s intentionally lying, but it sounds too good to be true.

Can anyone confirm that this is either a- "advisable" or b- "impossible" or even c- "possible but inadvisable"?

IF this is possible (if his recollection is correct, he’s going back 15, 20 years in memory), does anyone see any possible pitfalls, drawbacks or risks to this plan? Is there anything I’m not noticing about it? Any blindspots?

For example, I’ve already noticed that IF his recollection is correct, he’s still omitted the cost of the loan in his equation. He’s neglected to mention that with each repaying of the loan, he paid the interest out of pocket. That is the only “flaw” I’ve discovered in his plan.

In addition to this flaw, I’ve read that if you don’t take a year or so to pay back a loan it doesn’t significantly increase your credit score. Is there any truth to that?

Can anyone see any others flaws, omissions, problems, impossibilities with this plan? Thank you, I’m a credit novice, and before I do anything “creative” with my hard earned $5000, I want to make sure I’m seeing all the variables and it’s not a “gamble” but a “plan”.

Any help? Thanks in advance.....

Oh, and if this is a good plan, in exchange for helping me, then you too can use it for a small licensing fee. But a small hitch: in order to be licensed, you have to have good credit ;-)

Oh, and thank you for taking the time to read all of this. I appreciate it.....