How I raised my credit score 200 points in 2 years.

When I was 19 I foolishly let a car get repossessed.  This created a snowball effect of poor financial decisions being made over the next few years.  I was young, living on my own, and had no concern for the future impact that this would have on my life.  Over the course of 3 years I thoroughly drove my credit score into the gutter.

   By the time I was 22 I managed to get a decent job and begun the process of looking for a new apartment to rent.  This is where my previous decisions came back to haunt me.  Even though I could show that I was making 50 grand a year, certain places felt that I was too risky based on my credit report.  This put me in a position where I had to rent a less than desirable place that did not check for a credit score.

   After a few years of not seeing my score improve, even though I was paying my bills on time, I decided to do something about my low score.  The first thing I did was sign up to a free credit monitoring service like credit karma.  There I was able to see all of my derogatory marks on my report.  This particular service shows you the information from 2 of the 3 major credit reporting agencies. Those are TransUnion and Equifax. The 3rd major agency, which does not participate, is Experian.

   Armed with the information from Credit Karma I was able to see what old debts needed to be paid off.  But before you run out and just pay off anything on your credit report, make sure that the statute of limitations has not yet passed.  For those who don’t know already, in most cases if you have a debt that is over 7 years old, you are no longer obligated to pay this debt back and can file to have it removed from your credit report.  When I was doing this there were a few debts that we’re about to pass the statute of limitations so I simply waited the 3 to 6 months and had them dropped from my report.  This one tactic saved me about $2,000.  The remaining items on my report were paid during this same period.

   One annoying thing I noticed was that even though you paid the debt off, some of the creditors would not take the entry off of your file.  In this case you have to dispute the charge. Luckily, Credit Karma makes this easy and has an interface where you can just click a button that says “Dispute” and everything is handled through their site.  I have had multiple entries removed in this fashion.

   Now with my report looking a little more inviting to potential creditors, the next step to increase my score was to open lines of credit.  The only card that I qualified for at the time was a secured credit card.  This means I had to give the credit card company money up front and in return they would give me card with a credit limit of that exact amount.  Essentially it is like a debit card of sorts.  My first card had a limit of $300.  The reason why this builds your score is that it opens an account on your file and shows a history of repayment.  The particular card that I used even guaranteed that if I paid on time for 6 months, they would give me an unsecured card with a credit limit of $1200.  An unsecured card is what most people think of when the think of the word credit card.

   So that’s what I did and 6 months later I got my 2nd card.  During this time my score was going up a little bit every month.  Within the first year I was able to increase my score by over 100 points by just cleaning up my credit file and getting the 2 Capital One cards.  At this point I had momentum built up and when Credit Karma said I would qualify for another card, I would apply and get one.  Because every time you apply for a new line of credit it dings your score a little bit, I applied for new cards every 4 or 5 months.  At this very moment I have about $36,000 in credit at my disposal, but honestly I don’t use it because I believe in paying cash for everything.

   So through that journey, doing that exact process I was able to take my score from the low 500’s to the high 700’s in a little over 2 years.  I really hope you enjoyed reading this as much as I enjoyed writing it for you.  If you have any questions or comments feel free to contact me via the email address provided.  Also If you would like to have more money savings tips like the one you just read be sure to join my mailing list by clicking here. Thanks for reading!