I am grateful for all of the wonderful wisdom I have read in the last few months.
I am 48 and in the past 25 years I have filed bankruptcy three times with my last filing in 2013. My chapter 13 was dismissed in December of 2014 because I couldn’t afford the payments because of a drop in my income. Despite showing the paperwork that proved my income dropped, because I was behind on my payments, the trustee would not approve a significant lower payment. I filed this last 13 mainly because of parking tickets and falling behind on my mortgage.
Through this process of self examination, I learned the root of my money management failures.
With every bankruptcy, I didn’t have an extreme amount of credit card or secured debt.
This last chapter 13 broke me mentally. Not only was the 13 dismissed, it left me vulnerable to my parking tickets, late mortgage which was about to go into foreclosure and other debts. In February of 2015, I made the drastic and tough decision to do a short sale on my home. I owed $239,000.00 and a tax lien of $25,000.00 was still attached to it.
My fico score was hovering around 580 at the time. I had not read any of the comments on this board and I made the mistake of paying off a few things to prepare me to get a decent rental and my score dropped. Even with a dismissed BK in Dec of 2015, I got a secured card in late May, missed no payments and was approved for two capital cards $2,000.00 and $1,000.00 in mid June.
I had planned to only use the card for gas. My short sale was approved in July and miraculously I was approved for a very nice rental high rise. I moved weeks before the scheduled closing and everything got delayed by two months because my Condo’s Management delayed getting the paperwork to the underwriters of the Buyer. That forced me to use my card to pay for moving expenses, bills for the home I was no longer living in.
In October, stressed from the workload of my multiple jobs, I forgot to pay a credit card and old cable bill (not Capital One) and my score dropped to 522 because of the late pay and collection. It was then, I started to read everything I could on Myfico and it dawned on me I had to the following.
I am proud to say on Dec. 21st my FICO 8 jumped from 522 to 542 just by lowering my balances. Capital One gave my CL of $500.00 one of my cards in early December.
I didn’t think about using to buy gifts or to treat myself. There wer things I wanted but I simply had no desire to shop and spend the money. It was then I realized my mind was truly changing on how I approach money.
It’s about changing my spending habits and keeping my word than trying to get to a score. I was trying to get a certain score to get a home and when I got the home I went back to my bad habits. Renting is the best thing for me because it disciplines me to have my rent early before the 5th. I was incurring late charges on my mortgage, assessments and other bills because of my old demons. With the exception of my missed late payment, Since June, 2015, I have not missed a car note (got the loan in July), rent payment, four credit cards.
Soul Master and other contributors have shared wisely it’s a marathon not a sprint and you have to change your mindset. The Fico score is reflective of how you approach money and your character to be trusted to pay back what you owe.
Before December of 2014, I stayed maxed out on my credit cards and never had credit limits higher than a $1000.00. Most of my cards were $300.00 cards with high annual fees and interest rates.
Now, I have a combined credit limit of $4,000.00 and available credit of $550.00.
These are baby steps for me but considering my past, it’s a major hurdle.
I’ve been tempted to ask my mother to be an authorized user because of her 820 score but I know that is only treating the symptom. I want to the following that will give me the high score in due time.
I welcome any suggestions to help me with my rebuild. Thanks!
Happy New Year everyone!
Congrats on your progress. It can be tough for sure to look at our failures. I appreciate your openness and the fact that you are learning. The main thing is to remember to put those things into practice.
Good luck with your rebuild. Remember patience is the key. Don't get in too much of a hurry to get this card or that card. Plan and be strategic.