Today was my Credit Karma 12 year anniversary, and I wanted to share a story about my credit journey for anyone who may be feeling discouraged.
I opened my first credit card in high school in the late 90s to build credit, and I somewhat successfully managed it through college and for a couple of years later. I overextended a bit from time to time, but my credit score was typically in the 700+ range and loans and cards were always easily approved. A string of unfortunate events happened around 2008 - several unexpected deaths and tragedies with close friends, the company I worked for went bankrupt during the recession, my childhood dog and best friend of 17 years passed away, and more heavy stuff. I let a couple of credit card accounts go past due, and when I moved from one house to another my utility provider sent a final bill to the old address for $22 which I never received. They gladly gave me service at the new address and didn't mention anything about an outstanding bill until about another year later when I received a collections notice for the bill I never received.
My once stellar credit score tanked into the low to mid 500 range, and all my credit cards without a balance were closed by the issuers and those cards with balances saw the limit shrink to the outstanding balance making my utilization 100% or even higher at some points. After I paid down those balances, those cards were closed as well. Ironically, the only card that stayed open was that original card from high school (Structure later Express issued by Comenity of all things). I was devastated and couldn't get a new card, loan, or any type of credit. Combined with the personal stuff going on and barely making ends meet every month, I really didn't have much hope for my financial future. When my roommate and best friend moved out to follow a girlfriend to a new state, I ended up having to rely on payday loans for a couple of months to ensure I didn't lose my house. While I absolutely detest the idea of payday loans and find them to be predatory, I found a loophole/policy where the interest owed would be cut in half if the loan was paid back early. Back then (laws and policies may have changed), I could essentially borrow $1k for 10 days for about $45 which was infinitely better than missing a payment, having a bunch of NSF fees, or being assessed late fees.
After securing a new roommate, I was able to get out of the payday loan cycle, but I was still in a bad spot with essentially negative savings and no access to credit. Even though I'm sure my friends or family would have helped me if I asked, it was the absolute last thing I could bring myself to do because of the pride I had for being able to take care of myself with no help thus far. I started working when I was in 8th grade to buy my own clothes, my own car, my own stuff, and I worked all throughout college to minimize my student loan debt which ended up only being about $25k and thankfully had a <4% fixed interest rate. Even though it was the lowest I had been in my life in numerous ways, I knew it was possible to climb out of the hole by confronting the issues head on and learning as much as I could about credit and managing money.
I found this forum and started reading like crazy. The isolation and heaviness of feeling trapped and alone started to lift when I read about other's struggles and eventually the guilt and dread started giving way, ever so slightly, to optimism. I learned simple tricks to start climbing out of the hole like getting a secured credit card, which cards offered good credit limit increases with responsible use, how utilization and average of account affect your score, and so much more. After following all the best practices learned here, things started to improve dramatically related to my credit score, but I still had a glaring issue - I was spending too much, my salary in the mid $40k range was insufficient to cover my expenses and live independently while building savings and investing. If I really wanted to have a brighter financial future, I had to make a dramatic move and do something I had truly feared since the day I left home a couple months after turning 18...move back in with my family at the age of 29 to save money and get back in control of my finances.
In today's world, moving back in with family isn't seen as the failure it felt like back then, but it was a massive blow to my ego and conjured fears of being stuck there forever. I was single at the time and figured no woman in her right mind would ever date a guy with no money and a sub 600 credit score living at home with his family. Sometimes being proven wrong is refreshing, and living at home after being gone for 11 years was actually a lot of fun and made saving and paying off debt infinitely easier. Even better, I met the most amazing woman just a month after moving home and took her on a date. For fear of losing her once she inevitably learned about my situation, I opened up and told her everything right away. It wasn’t simply a sob story however - I highlighted my plan to get out of the hole and what my financial and life goals were. One of the first items on the agenda was getting rid my car with a $400 a month payment and buying an old beater for a couple years until I could pay cash for its replacement. Hilariously, I had sold the car on a Saturday morning and didn’t have a replacement yet for my second official date with her later that afternoon, so my mom literally drove me to the date and dropped me off a block away to avoid any embarrassment. It didn’t work - she saw anyways haha!
What came next was probably the most important life lesson I have ever learned. After coming clean about my situation, my plan, and showing up to a date with no car and having little more to my name than the backpack I was wearing, this incredible woman told me she didn’t mind one bit and was glad I was taking my - and what would become our - future seriously. She shared after college she too moved home to get on her feet financially and while she had zero desire to do it, knew it was the right thing to do. I realized the wisdom in the old adage I had heard many times over the years - the partner you choose to spend your life with is truly the most important decision you will ever make. Being open, honest and vulnerable, being on the same page financially and confronting challenges together, supporting one another, and wishing for the success of each other paves the way for a successful relationship. We continued dating - me living at home, she living across town with roommates.
Within a few months, I had eliminated all debt except for the student loans. About 6 months in, I left my job for something with more opportunity and boosted my wages by 50% and had a much better path to promotion. About 9 months in, the student loans were gone, and I had a nice emergency fund plus savings for the first time. Daydreaming about where I might live when I left home, for the second time, I was driving around and found a super cool new build condo going up in an area that looked promising. An older part of town that was being revitalized, the price point was something I could actually afford, and the timing would work well with a potential move in date about 6 months away. By the time I applied for the mortgage, my credit score was finally at the level to qualify for a great rate, and soon I had keys in hand. In many ways, it felt like a dream…something so far out of reach it felt impossible not long ago. But it was possible due to the support of my family, my girlfriend who believed in me, and through hard work and constantly trying to learn more about how credit works - much of which was discovered on this very forum.
The area where I purchased the condo saw an explosion in investment which skyrocketed property values which led to a huge increase in equity within the first year. Work also continued to get better leading to higher earnings and more responsibility, and two years into dating, we decided to start thinking more about the future. The condo was a small one bedroom not conducive to 2 people plus a dog - a dog I initially didn’t want which eventually healed a big hole in my heart from losing my childhood dog. That’s a whole different but fun story! Luckily we came across a perfect place at a great price for the both of us plus the dog, bought it, moved in together and a few months later…we got married!
As the financial picture grew rosier over time, I continued to visit these forums to learn how to grow things like credit limits to reduce utilization, take advantage of lucrative bonuses, and have more control over finances rather than the other way around. My wife and I had a little competition to see who could get the higher FICO score, and within about 4 years of meeting each other we were both over 800 and have stayed there since - a few times getting as high as 848 out of 850. When I had a single credit card with a $300 limit and a score in the low 500 range, I truly never expected one day I would have credit limits exceeding $230k and a score nearing perfect. For many years, I only paid credit card minimums which barely covered interest, but from the day I moved home to fix my finances, I never once paid a dollar in interest on credit cards or late fees.
The point of this post is not to be boastful about the incredible good fortune I have experienced. I want to share my experience because I want to let you know if you are struggling, there is hope. I didn’t have hope for a long time but found solace reading about other’s situations and learning tremendously from them and the collective knowledge here. I found addressing issues instead of ignoring them is imperative. Cutting spending and being honest about the situation is critical. Sucking up your pride and doing things you may not want to, like me moving back home for a year after being independent for over a decade, dramatically improves your future. I am unbelievably grateful to have found my partner who helped me grow in countless ways, for the support of my family to help get back on my feet, and for the knowledge base that provided invaluable information to get back in control of my financial life. Thank you community!
PS - seeing today was my 12 CK anniversary accompanied by the 222 point score increase made me want to share my story to help give hope to others. It takes time but it is possible!
