Rebuilding credit for the last time!

[wdizzle]

Hey Forum,

I've been reading everyone's posts and scared to write my own, but the support and advice provided here makes a difference. Sadly, I've been 
"rebuilding" my credit for almost 20 years. It's been a never ending cycle with me.....secured card, terrible payment habits, collections, fall-off, repeat. I used to sporadically pull my credit score, but never monitored it. I've always paid high interest on my car notes---I just accepted that's how life was going to be. Fast forward, I moved out of the country for about 6 years, closed credit cards and when I came back my credit had lots of collections and my score was 550. Ironically, the 550 didn't bother me. Another fact of life I accepted. The biggest mistake I made was closing the accounts because some of them dated back to 2003 and they all had perfect payment----I didn't realize it until I started over again in 2016 when I studied my credit report. Really studied---I took note of DofD for fall off dates, I paid small accounts ($67.00 for example) and decided no more bad credit for me. This is my story.

Last year I bought a car (22% interest) thinking that the way to build credit is to apply for credit and make on time payments. I also applied for a Capital One card (limit $300) and Discover (secured, never funded, HP). At the time my score was 560 or 570...something bad!!! I also had my mom add me as an authorized user to her CC, but I didn't know that she had a few late payments. Imagine building a crooked house on a crooked foundation!!!

6 months after on-time payments on my car note, I refinanced at a rate of 15% and reduced the length of my loan by 7 months...that's a win for me. I'm going to refinance again. I got a credit limit increase from $300 to $500....also a win, I've never had a credit limit increase. I celebrate the small steps and keep in mind that every step forward is closer to my personal financial goals.And I helped my mom pay her cc to get it back in good standing because now I'm personally vested and benefitting from her 10 year history. In between all of this a new collection account hit and dropped my score to 492. I was devestated and discouraged. I disputed it and it was removed which made my score jump back to a respectable 512...geesh. I also decided it was time to pay my student loans, so I took them out of deferment...bam...67 point increase. I assume becuase now it's an active account. After one year of paying my cc and car note on time, my credit score never went past 595. I couldn't understand why not. I'd expected my credit score to be in the mid 600s. It dropped again when I maxed out my credit card..back down to 580s. 

Then I started reading and learned about the factors that increase your score. Making payments on time is important, but it's not the only factor. I learned about utilization, statement reporting dates for balance, types of credit, impact of collections and number of inquiries. Once I started to use what I learned to focus on not only paying my cc on time, but keeping the usage low, I saw the increase I'd been waiting for. In the past 3 months my score has increased and it's higher than it's ever been. Now my scores are EQ597/EX613/TU631 and for the first time I feel like I'm actually making progress and I get it. I check my credit score weekly and pay special attention after Cap One reports to the credit bureaus and look forward to receiving my new favorite text message " a change has been detected. your score has increased XX points". I pay everything on time, I don't apply for credit because I want to preserve my score and I know that realistically I don't qualify for what I want yet, but I'll get there. My goal is 650s across the board by Feb '18 and 700s by the end of next year. I vow to never have another collections account again as long as I'm able to pay my bills. 

I wanted to share my story because I know how frustrating credit is and the effect it has on your self-esteem. I read posts from 20 year olds and 30 year olds about cleaning their credit. My parents are immigrants, so they didn't grow up with credit and don't believe in it. Truthfully I'm not a fan either, but I see the benefits in taking responsibility for my financial health and having access to credit lines. I'm a 40 year old woman who has finally stopped rebuildng credit and is now managing credit. I'd love to hear others' experiences no matter where you are in the credit cycle. 

[marty56]

I didnt get me credit act together till my 50's.  Managing my credit is not easy for me.  I like using my CCs too much.  Once you get your credit where you want it the hard work starts - keeping it there.

[Anonymous]

I was always good about paying the bills on time, but my debt kept climbing and climbing even as I was making more and more money. I left that high paying job and when I reentered the job market, I was earning quite a bit less but at a job I loved. I did finally get behind on the bills the last 3 or 4 months I wasn't working and when I sat down and calculated all of my debts vs my new salary, it was clear that something needed to be done and I filed for CH7 BK.

I have been rebuilding my credit for 2 1/2 years and my scores are higher now than before my BK. I have $46k in revolving credit, savings to last me a minimum of 6 months (If I had to go into super conservation mode I could probably get by a year on it) and I'll be debt free by next summer.

You mention "as long as I'm able to pay my bills." The MOST important part of credit building that so many people overlook is EMERGENCY SAVINGS. Do what it takes and get 6 months minimum of expenses saved and don't touch it. This is typically enough to weather unexpected job loss or whatever other hurdles life throws at you. Savings is essential to protecting the credit you're working so hard to build.

[Anonymous]

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@Anonymous wrote:

 I have been rebuilding my credit for 2 1/2 years and my scores are higher now than before my BK. I have $46k in revolving credit, savings to last me a minimum of 6 months (If I had to go into super conservation mode I could probably get by a year on it) and I'll be debt free by next summer.

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Not intending to hijack but wanted to mention to SteelerNYC to try to do a second "poverty" budget if you haven't.  I highly, highly recommend it (in fact it's part of the 10 year plan I pitch on Facebook to folks building wealth and safety!).  A lot of folks who get to the 6 month mark find out they can actually go almost 18 months in poverty mode!  Helps reduce financial anxiety having that backup budget ready to roll, just in case life lifes you.

[Anonymous]

Hang in there OP.  I just started rebuilding my credit within the past couple of years.  If only I had found this forum sooner, I think my credit would have been much higher than what it currently is right now.  I was misinformed and always assumed that I need to carry balances on all my cards for Fico to increase since the banks were out to make money on interest on the cards.  I ended up wasting time and money and my score kept hovering around the low 600's range forever.  Ever since I found this forum, I've been making slow progress in increasing my fico.  It just takes time, but the important thing is to not let it stresses you out too much. 

[Adkins]

Keep working and don't get discouraged! We've all been there and have dug or are digging out now. Congratulations for the hard work you've done so far!

[tricie17]

Credit and saving for living emergencies is a hard balance of life.  Although this forum has a wealth of information including mine, I am still struggling.  The lessons are forever learning. My scores move up and then move back down all the while paying monthly.  As my age crept upward, the more I thought about credit which I am just understanding and saving too.  I am hoping one day to walk into a finance office with not any issues and purchase what I want and not what someone negotiate because of credit.