If you want to loan yourself money to build a credit history, why not just use a secured credit card and pay 0 interest. Go to your bank and apply for a secured credit card. Only ask for enough credit to cover what you spend on gasoline every month. You’ll have to put that much in a savings account to cover the card. Use online banking or your your credit cards website to schedule automatic full statement balance payments from the savings account each month. When you get paid at the first of the month you need to put in more money to cover next months gas.

This was you are basically using the credit card like a debit card, never charging more than you have in the account that secures it. You are paying no interest because you pay off the statement balance each month. Yet you always have a balance because you will certainly charge some gasoline (or groceries, or whatever other recurring monthly expense you want to use it for)in between the statement closing date and the payment due date.

This allows you to develop a history of having a credit line open and making payments as agreed. Never ever pay less than the full statement balance though, as interest rates on secured cards tend to be high.

I know that when I originally received my loan Prosper’s collections department was going through a major change and I know they were in the process of updating a lot of their policies especially the collections of defaulted loans.

It’s a good site for people like myself who has trouble getting a loan previously with a low credit score. But since I’ve had the Prosper loan payments taken automatically out of my checking account my credit score has gone up every month.

Another thing to consider – this might temporarily hurt your credit score before it helps because you have more outstanding debt.

Could this be similar? Pay someone a fee off-Prosper, do a 1% prosper loan, and the score goes up?

Neither of us are sure if this will happen though because their debt reduction plan is based on 4 years or payments and Prosper loans are 3 years.

Interesting article and idea.

Yes. Because Prosper reports all payment activity to credit reporting agencies, using Prosper is an excellent way for new borrowers to establish or rebuild their credit score. In addition, delinquencies are also reported to credit reporting agencies, so bad performance will affect a borrower’s credit score negatively.”

Laura – I’m not a tax person, but I didn’t find that the definition of a gift to be a cash amount under the AFR. If so, a 10K or 12K limit should be more that enough to build credit – I would suggest working with a lower amount. The lender does have to report his earnings on his tax – but it’s not much different than having an ING account.

kind of a pain perhaps…