When I started working on my credit eight years ago, I was down in the dumps. My credit score was terrible; I’m talking within the 550-615 range. I remember looking for a new apartment back in 2014, and I had to close my eyes before showing it to the realtor. It was embarrassing, and I felt so ashamed. When others talked about their good credit, I would only listen and wish that the tables would turn one day.
How I Ruined My Credit
At 19 years old, I knew nothing about credit or credit scores. Or, about managing money either. Yet, I applied for every store card I could get my hands on. It was the summer after my freshmen year of college, and I was home with no job.
So get this…good ole’ naive me; maxed out all those credit cards and had no way of paying them back. I must’ve thought it was free money or something the way I had fun spending. Anyway, while I enjoyed my good fortune, I didn’t realize I was ruining my credit.
If I learned anything about money management in high school, I didn’t remember a thing. And my family didn’t teach me anything about money either. Can you say “lost?” Yes, that was me running around with blindfolds. My name embedded on those cards was exciting and made me feel special. I was young, hungry, and blinded by the charge card bling. It felt good though I was living on credit and didn’t know it.
I probably had about 4-6 charge cards stacked up on my credit report within months. And all carried balances, my score was dropping lower and lower. Plus, I wasn’t making any payments, and that made it worst. All my accounts were becoming delinquent; my payment history was zero. But I didn’t have a clue what was happening. I didn’t know I would need good credit to buy a car, open a bank account, or rent an apartment until later on.
The Road to Good Credit
At age 23, when I moved out on my own was when I started learning about credit. I needed a car. The dealer ran my credit. I needed to rent an apartment. The leasing office ran my credit. And I needed to open a bank account. The bank ran my credit. I needed a phone, cable, internet, light, and water too.
With a less than perfect credit, it was getting harder and harder to get approved. Or I’d have to come up with down payments I could not afford. Plus, I was not good with money and working low-paying jobs.
Fast forward to 2013; I seriously started working on my credit after many years of feeling hopeless. To begin with, I conducted a lot of research. Then I printed copies of my free credit reports and started monitoring my report on Credit Karma. I had over 20 accounts by then, and almost all were delinquent. It wasn’t pleasant. I had lots of work to do.
What Helped My Credit
So these are the things I took to rebuilding my credit (in no particular order):
- I ordered free copies of all credit reports. For the first couple of years, I would get my free credit reports and comb through them for errors.
- I disputed every account, even addresses, weird spellings of my name, and previous employers. I fought everything and watched many items fall off my credit report. After disputing, my accounts were down by at least half.
- I monitored my credit report on Credit Karma. It was free and still is. Even though it wasn’t the actual score, it wasn’t too far off from the real one. Outside of that, I kept tabs on everything else to make sure nothing extra ended up on my credit report. Or that no existing accounts in good standing became delinquent. That meant I had to get in the habit of paying my bills on time.
- I applied for credit rebuilding cards. I had to make deposits before the cardholders would issue them—$100 or $200 deposits for a $300 or $500 credit limit. Back then, I applied for 2-3 cards to get the ball rolling.
- I waited out the 7-year waiting period for the remaining bad debts to fall off. Or, in rare cases, I negotiated a lower payoff to avoid my paychecks from being garnished (student loan debt).
- I carried balances on my credit cards. I realized that if I had balances for a few months that once paid off, my score would sometimes jump up 20-40 points. And while interest piled up, it worked in raising my score each time. The Credit Karma simulator helped a lot with that.
- I requested higher credit limits. Every 3-6 months, I made sure to requests higher limits to keep my utilization low. I now carry cards with limits up to $19,000. My current utilization sits at zero percent.
- I made every monthly payment on time and paid off high-interest cards and personal loans early. That meant no more missed payments, even if it meant paying the bare minimum.
By following these steps (in no particular order), my credit score jumped to the mid-to-high 600s by 2015. And by 2016, it was hitting 700. Then it was nearing 750 (and over) by 2017. I had raised my score by almost 200 points! Not bad, huh!
My credit score improved so much that I bought my first home with some of the lowest interest rates on the market. And with good money management skills, of course. I’ve learned a lot about credit, budgeting, and saving.
The Mistakes I Made
But, I made so many mistakes on the way. I procrastinated a lot. I had a nasty habit of racking up debt on my credit cards and paying them off. I then racked up debt again to keep my cards active. Another ugly habit of mine was taking out personal loans to pay off said credit cards.
These are the things that hurt my score the most:
- I often made the bare minimum monthly payments on those high-interest cards. So, I was barely making a dent in my balance.
- I had high balances compared to my limits. My credit utilization would hit between 30-60% sometimes. Plus, my credit limits were low in the beginning, so it was damaging.
- I paid off every credit card and closed the accounts. It hurt my score so much that I reapplied for those same cards six months later. The only difference was no deposits and higher credit limits to match my improved credit scores.
- Too many hard inquires. I would be down to 1-2 inquiries, and then before I knew it, I racked up more hard inquiries.
- I added extra debt by taking out personal loans, three loans over eight years. The personal loans, car loan, and credit card debts kept my debt-to-income ratio high.
- No mortgage. I didn’t have the proper credit mix.
Even to this day, some of these negatives are still affecting my score. But, I am still learning, and that’s always a positive thing.
I tailored the steps I took to rebuilding my credit to fit my needs and according to my available resources. I didn’t use any credit management agencies; I did it independently. Through research, time, devotion, and hard work, I reversed my bad credit. And you can do it too if you are in this situation.
Budgeting, saving, paying bills on time, and paying off debts are some of the biggest lessons I’ve learned from this experience. I wish I knew now what I should’ve known back then about credit and money management. But it’s all good, look at me now. It took a short time to ruin my credit but a lot longer to rebuild it.
After it’s all said and done, I raised my credit score by almost 200 points by trial and error. It probably wouldn’t have taken eight years if I didn’t procrastinate as much as I did. The journey was stressful, painful, and embarrassing, but it was worth the wait.
The internet has a wealth of information, so you can find everything you need by doing some research of your own. Having a bad score is not the end of the world, though it is harmful.
There are many ways to rebuilding your credit. I have included some ways you can use to help your score rise. It’s going to take some time, but you’ll see progress if you stick to it.
Do you have bad credit? Have you ever had bad credit before? What was your credit score? Did your credit score improve? What challenges have you faced? Do you have any guidance for people struggling now? What worked for you? What didn’t?
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