Three years ago I had a 434 Credit Score. After making a plan and laying the groundwork, today it's at 703!
Posted Apr 8, 2019, 11:45 PM UTC
7.2K200
I applaud you !
Great job !
Taking care of yourself is always the first priority … and you cannot be truly healthy when your finances are a mess.
I salute you, sir (or ma'am or whatever).
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Fantastic mate! I started at 480, currently up to a 680... slowly working, striving for that Chase Sapphire Reserve card!
Keep up the good work!
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got any tips? really anything a dumb kid who doesn’t know anything should/shouldn’t do?
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Your credit score is looking at your delinquencies, number of open accounts, age of the account, and inquiries.
Pay your debts on time. If you don't have a credit line open, you should open one (as counter-intuitive as that seems). Be careful about applying to cards, since this can temporarily affect your credit. Do you have any specific questions?
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If you don't have a credit line open, you should open one
If i’m being honest with myself, I’m not sure I totally even know what a credit line is. I have a credit card, my own car (bought it used, paid in cash), and student loan (currently in school). Which, if any, of these are examples of a credit line? or is it something totally separate
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A credit card and a student loan are both the types of thing being referred to here
Your car isn't because you just bought it up front
u/thoughts_prayers was probably referring to credit cards in particular though because having one without an annual fee that you use responsibly turns you from an unknown into a responsible individual in they eyes of the companies that determine credit scores without you having to spend any extra money
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A line of credit is pool of money linked to a credit card typically. If you're credit card has a $500 limit, that means you have a $500 line of credit.
There are typically two versions of this:
Installment loan: Usually a car loan or sometimes student loans that you pay a set amount over a set time period. Pros:
- usually lower interest rates
- from my experience, easier to get
Cons:
- Can only be used once before you have to apply for another. You can't increase the value as they give you the money once.
Revolving Credit: Usually something like a credit card or a personal line of credit. Pros:
- You can pay a minimum balance amount
- You can take up to the entire limit or as little as you like.
Cons:
- Higher interest
EDIT: Sorry for formatting, typed this beast of a message on my phone while riding the bus ...
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Your credit card & student loans are examples of credit lines. Your student loans will likely be deferred while you're still in school, so that won't impact your credit score. You should continue to pay your credit card & pay the entire balance every month if you can.
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Look into a discover it card or capital one secured card.
A line of credit is essentially a bank extending you “credit” or a loan you can use consistently each month.
Why you might ask?
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To boost your credit worthiness (likelyhood people will loan you money.
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Saving cash
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Sweet, sweet benefits on cards such as points for travel or cash back.
You just have to make sure you’re responsible enough to pay the “loan” back monthly.
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If you are new to the credit world, I would suggest getting a gas credit card for a station near you. One that only lets you buy stuff at that specific gas station. I would use the card to pay for gas, and then pay it off almost immediately.
It was good for me, because I was already buying gas for my car, so I might as well get some good credit ratings for it. And it had the bonus of introducing me to the world of credit without tempting me with something that would ruin me like a Best Buy card.
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My best advice, establish a relationship with the “big 4” credit card and their associated banks.
- Chase
- Capital One
- American Express
- Discover
Open up a bank account at your favorite and do all your banking through them.
Slowly build your reputation... patience helps alot. Nothing will skyrocket your credit overnight.
I took the multiple credit cards strategy and it’s worked well. Currently have 6 cards... only two of which I use.
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The only good Chase product is their credit cards. Their bank accounts and support is terrible unless you're rich.
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Capital One was my first card. My only complaint is I have found it impossible to up the credit line on it. Even after 10 years of owning the card my credit limit is the same.
Pro is that it's a Capital One Platinum card but since I called and asked for rewards it gives me Capital One Quicksilver cash back without having to apply for a whole new card. That is a plus.
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What’s so good about the Chase Sapphire Reserve?
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i think its one of the best travel reward cards you can get but you have to have a high credit score to be eligible
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I don’t know you stranger, but I’m happy for you and proud of you!
Keep up the great work!
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Good job dude!! I just hit 683 the other day. Very proud of it
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I went from a 630 to 815 in a little over a year...keep pushing.
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I'm only 20 and I hate my CC. I might just use my debit
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I don't use my debit card. Finally found a bank that doesn't force you to keep X amount of money in the account at the end of the day, but I find debit cards a lot more frustrating.
As long as you don't spend more than you can pay off before interest on a card then credit cards are great tools.
Like if I didn't have my credit score I wouldn't have been able to buy my new lawnmower at lowes. They had a 24 month %APR so I didn't have to fork out the money immediately. If I take the total price divided by 24 I'll know how much money to set aside each month. That money will be earning me money until I need it to pay off the credit card.
Also cash back and miles are free money.
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Consider going into the bank/credit union/company you financed your car through and ask them to review your interest rate. They may be able to lower it since your score improved and you’ve paid toward the principle quite a bit!
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Agree! Refinance that shiz baby!
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This is exactly my story! Student loans and secured capital one credit card. But I'm at the very beginning still. I am so hopeful after seeing your success. Congrats! And thanks so much for the motivation.
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Great job turning it around! My wife's score was in the low 500s at one point, due to her parents not telling her about medical bills when she was in college. Got it up to the 700s before we bought a house, and it's only gone up since then, so keep at it!
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Hey, replace medical bills with student loans and that’s how it is with my wife. I’m working on it, among working out tons of their other mistakes.
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I'm in a similar boat. My score is now hovering around 750. I don't even know how bad my score was back when I first made the stupid decisions that ruined my finances, but I started tracking it about 10 years ago and it was in the low 500's.
The difference for me is that about 3 years ago I got into a special student loan repayment program where I am not in default but my payment is based on income, recalculated every year. It started at a little over $200 a month, but I'm finishing off a year of 0$ due to my income level a year ago. And after 10 years on this program my balance will be zeroed out. My loans go back about 25 years and what I owe now is literally just over twice what I actually took out in loans, thanks to interest and penalties accumulating. It is absolutely criminal how much money the government will pass out to children like how I was back then who have no idea at all what a horrible mistake they are making in taking out those loans.
I just finished an 8 year process of paying off a card that had at it's peak nearly 10k balance. I have one more with 2,500 on it that will go away this year, and I will have zero credit card debt for the first time in 20 years. Feels good! Slow and steady wins the race!
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And after 10 years on this program my balance will be zeroed out
Are you referring to PSLF?
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Wow that’s amazing!!!
Good job! I hope you’re extremely proud of yourself!
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I easily did the same thing. It's not hard. What's hard is keeping it at that for 3 years so you can even be considered for a housing loan. Congrats though..if nothing else, it's exciting
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You just gave me so much hope.
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MY👏🏽MAN👏🏽
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415 this time last year, 609 today.
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How can one increase credit score, without getting a credit card? It feels wrong to me to have money you don’t own, like a loan or credit card. I only use debit. If I can’t afford it outright I will not buy it. I have student loans but they are small and have been paid off automatically from my income each week for almost two years now. My credit scores is in the 700 already but I wouldn’t mind improving it. Although I doubt I’ll need it as I will not be getting a loan for anything. Thanks
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Honestly just get a credit card, but use it like a debt card. With a credit card you can get rewards like 1% (or more if you can get better cards) cash back, and as long as you're using the card in a responsible way, that's literally free money. I opened my first credit card oh like half a year ago to build credit, and I'm getting like $3/4 per month in cash back rewards. It doesn't sound like much but all I'm literally doing is swiping my credit card instead of debt card (and then having set auto pay to pay it off in full).
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Get a credit card and only buy gas on it then immediately pay it off, or do once a month.
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Well you can get a secured credit card and never take back the deposit. You have to deposit cash equal to the credit limit and they hold that. You don't need to max the card out, just buy something every month and pay it off right away to keep the account active and showing payments.
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The other replies are good advice but to answer your question directly; it's either credit card (which is revolving credit), loans like auto or personal (which is installment credit), or mortgage.
Living within your means is the best way but your credit score is to tell lenders how you handle a credit line and your debt. If you dont have a history of debt and payment, then they look at you as a risk because they dont know how you handle living outside your means. Credit scores are based on a lot of things but the big ones are length of credit (oldest account and average of all accounts), how many accounts, debt to credit ratio, and inquiries. I personally lost a couple points when I paid off a personal loan because that brought me below 4 accounts. It's ridiculous.
So like others have said, take out a line of credit that is within your means and pay it off regularly. It's the only way I know.
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Credit of some sort is really the only option unless you want to take out a fair sized loan on something. With only having small student loans your credit utilization is very low and credit history is fairly young. I'm not sure of what benefit a prepaid cc will be to your score, your util wouldn't change much but it may build beneficial history. If you're adamant against credit just keep paying the student loans and your score should keep gaining a couple of points a year, more than enough to be able to shop around for competitive interest rates when the time comes. Just don't take any hits, with low credit util and history your standing on a glass floor.
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Wow! That’s amazing! Great job! You deserve a pat on the back.
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Were you in default? Did you do an income based repayment for the loans?
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You had 0 credit cards and now you have 4? Is this progress?
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If the savings account is flush available credit don't mean shit. Shiz getting paid off at the end of the month regardless.
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I am so proud of you!! That’s a huge accomplishment and you should feel awesome
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The Capitol one card is amazing. Had it 3 months. Up 30 points. 29m similar situation.
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(30m) I'll try to keep this short but I was definitely going through a rough patch financially a few years ago. I was scared because I knew my credit score was in the shitter but I decided I needed to take the steps to start improving it otherwise it was just another added stress looming over my shoulder.
My score was so low at the time because I was delinquent on Student loans (they are still showing as late payments on my score, it should drop off in a few years and increase my score tremendously). I never paid them because I was anxious and I let the anxiety take over my life. I also had no Credit History at the time and I had 2 Credit Cards that I cancelled, all of these things resulted in this abysmal score. I decided I needed to just stop and make a plan.
I literally did 2 things to increase my score: I opened up a secured CC with Capital One and started paying the minimum's on my loans. (I know, mind blowing stuff)
The key here is Time. I didn't use my CC much and honestly I still have a $500 limit I started with. By just consistently paying the minimum's on my Student Loans, i was slowly watching my score increase and I'm pretty sure it jumped around 50pts within the first 3 months, that's when I saw some hope. Two years into this, my car broke down and I (stupidly) financed a new Honda Civic. My score at the time wasn't the best (~635) so my Interest ended up being (6%). Interest to me doesn't really matter since I am paying a little more than double my car payment (going the Dave Ramsey style and aggressively paying this off). Since I am in good standings with my Student Loans, CC and my Auto Loan, my score has jumped to over 700 for the first time since EVER. Tbh, I kind of forgot about my score until I decided to log into CK to check what I owed on my car and saw my score and was blown away. Figured I'd just post this for anyone who was in a similar spot as me. There's hope.
TLDR; Used to be scared of my Credit; did 2 things to increase my score, Opened a Secured CC and paid minimums. Kept it consistent and overtime my score jumped.
Man are you me? I was in total default in my student loans up until spring of last year when I called in and got put on a rehab program—literally just got mail today saying I completed it and was handed off to Navient. It was years of anxiety that put me in that spot and just a few phone calls to start digging out.
Did the same thing with Capital One credit cards. Last year I also added three easy soft-pull store cards to up my available credit/lower utilization (Overstock.com set me up for $2k), and that helped as well. Went from sub 500 score to, as of last week, 725.
That’s great work you’ve done—keep fighting the good fight! 🙂
Which store credit cards were soft pulls? And the Overstock card was for sure not a hard pull?
Overstock, BrylaneHome, Victoria’s Secret, none of which I’ve used. I’ll need to look at the fine print soon to see how I can ensure they stay open. Forgot I also added a fourth—Ulta—since I got the prompt and actually shop there.
It was a soft pull for Overstock. Kept a close eye on my report after picking up the cards and didn’t see anything, and my score only went up.
Did you say you got approved for those at a sub 500 score? I wanted to apply to try and raise my score but I read on some sites they think you need around 600-650 and I just barely broke 600 recently so I was scared to apply.
I couldn't remember why I recognized the name Navient and then I realized John Oliver did a whole student loan episode about how awful they are.
Ooooh thanks for the reminder I should go back and watch that episode!
How long did the call take to get on the rehab program? And what paperwork did you need for it? I’m planning on doing that soon I just need to know how much time it’ll take.. I have to get a babysitter so I can sit down and actually get through it. After my 8k refund was garnished, I’m putting my foot down
Not terribly long. It happened over a few calls. I called them up and explained the situation. I was very nice and they were very nice (probably because they deal with assholes all day). They had me fill out a form with income information and upload it to their online portal. Over the phone they estimated my monthly rehab payment, but a week later they called and it ended up going up by $50 once they crunched the numbers.
Automatic payments were easy enough to set up. I ended up being set back a month because my debit card had been shut down (fraud) and I forgot to change it with them, so the payment didn’t go through. That payment apparently didn’t count because it was “late”.
I went through the program a few years ago. If I recall correctly, as long as you make 9 payments in a row on time, they release you from rehab (heh) and your loan goes back to a servicer (in other words, it takes 9 months). Just pray you don’t get crappy Navient! I got assigned to FedLoan, which so far has been great.
Re: the call, I got called almost immediately after my tax refund was garnished. Within a few weeks, anyway. The call was from a collections agency and I was skeptical because I’d never heard of the loan rehab program. They were very understanding and gave me the time to look them up and find out they’re legit. They told me that happens a lot.
That gives my hope as I’m in the same boat
You’ve got this! 🙂 You can always dig yourself out. I share an office building with a credit counseling agency and am friends with a couple of the folks (and will likely be getting some advice from their student loan guy in the near future). Some of the stories I hear are downright crazy. People with hundreds of thousands in debt, folks refusing to believe they’re living above their means, folks being downright nasty and mean to the folks trying to help them, folks who have given up. The fact that you’re reading this subreddit and post is already a sign you do care. Keep chugging away. There’s a lot to be said for just having the knowledge.
My parents went bankrupt about 7 years ago. Zero financial literacy. Even after their bankruptcy they have no idea how to get their credit score, and still believe it will knock their score down just by checking. I try to explain otherwise, but it doesn’t stick. Knowing where I stood and learning some of the basic steps to improve (along with forcing myself through the anxiety), did a whole lot. Am I financial wiz with savings, an excellent score, and investments that put me on the FIRE track? Hell to the no, but I feel better at least knowing the steps to get there in the future.
6% interest on a car loan isn't great, but its not terrible either.
Considering I’ve seen some with over 10%, it’s definitely not as a bad as it could have been. Glad OP was able to get a mediocre interest rate versus a “holy fuck, I didn’t realize car loans had that high of an interest rate on them.”
Ya. And I'm not trying to one up you, but they definitely go as high as 15% on used cars, from what I've seen.
Im sitting at %21 on my used car. Sub 500 credit score when applying for a loan, it had to be done but now im almost at 700 then I will refinance and get a better rate. Dont be me, buy a beater untill you can get a better rate!
You don’t sound like one-upping. You sound like you’ve seen some stupid high shit interest. :)
Yeah, I moved back to the United States after many years and had zero credit score. I bought a car on a loan to start building credit back up, and the interest rate was 30%. I paid it off fully the next month, but still had to pay around $90 interest just for that first month :/
To build my credit I bought a used car in 2013 with 17% interest and paid faithfully to capital one, then in 2017 got a Ford focus new from from Ford at 6%, then this Christmas I got a Ford edge last 2018 model discounted at 1%.
Interesting. By discounted, do you mean you purchased points to bring the rate down?
Dealerships dont like cars that sit on a lot espwhen the next years models have been selling for awhile too.
Nice work! I went from bankruptcy to mid 500s to 825 in about 11 years. Started with secured Capital One and ended with almost every Chase card (once I found r/churning)
I now carry zero debt of any kind and will never go back.
Question. I’m currently in collections for medical records and I am the same way. I’m nervous on calling them and setting up a plan because there is no way I can afford $5000 right now. This is the only thing I’m bad on. Only have one credit card paying minimum because of my current situation. I pay my car payment diligently only have a few 7 day time period, because of pay period/forgot.
Should I figure out a way to make a payment on medical? I didn’t know it would destroy my credit score (went down 180 points when it went into collections) I thought it didn’t the effect was that great on medical because of certain laws being passed. I know you might now have the answer but if anyone does, that would be amazing.
Also, if you do enter collections you can have it expunged off your record if you add it into the negotiation.
Medical bills can be fairly easy to deal with.
Call them and see what their repayment options are. Have an idea at what you can pay, and figure out how to setup auto pay or making online payments. They'll probably throw some unreasonable things your way (like fully paid in 12 months) but stand your ground on whatever amount you have in mind. Even if it's $10/month they have to stop reporting negative.
Tell them that before you send them anything you want to get in writing that the account will be removed from your credit once paid off. It's more likely to go your way if you tell them you've just been made aware of this debt from your credit report, never received a bill before. That's the laws that were passed I think you're thinking of. If you're willing to work with them they're usually willing to reciprocate, but that's not the last option. If they can't or won't do that, go forth with the payment plan, and once you get it paid off you can dispute it with the credit bureau using the same reason as above.
Good luck!
Thank you for this response. Even if it’s in collections? Cause that’s my biggest problem. I’m on top of all my other debts, this one is killing me because it is in collections.
Yes, even if it's in collections...the main reason the law was changed was because the medical billing industry is a cluster fuck and these types of collections were ruining people's financial lives completely unbeknownst to them. I believe I've read that you can request that the debt be transferred back to the original creditor if you want once payment plan is in place, but I don't think I've ever had them do it. If they do it might remove all negatives immediately.
Whoever you're dealing with will likely want you to setup a 12 month repayment plan (even if it's not for the full amount), and you can call and readjust your payments for the next 12 months depending on changes in your situation. Just don't forget to keep up with it.
Also remember that they don't charge interest, and as long as you're trying they can't report additional negative. I stretched one bill out for 3+ years because of that, paying $50-125/month, even though I probably had the means to pay in full...BUT, mine wasn't on my report, and if it's already reporting negative it will likely stay on yours until paid in full, so make a plan you're comfortable with.
I’ve mentioned this before on this sub, but if your medical bills are already in collections, there may not be a reason to pay them if you can’t afford it. If you have the extra money and can pay it off then go ahead. But if you’re patient you can just wait it out a while and they will go away. The limit for them to stay on your report is 7 years. I had probably $15000 in medical debt and never paid it. Most of it dropped off within 3 years. I now have 2 collections accounts left for a few thousand and my credit score is up to 700. When they drop off in a few more years then it will continue rising from there. I don’t plan on buying a house any time soon and I only buy cars with cash, so for me I’m willing to be patient. Make sure you dispute them before you attempt to pay them off. I had maybe 6 collections accounts, disputed all of them and 4 dropped off my report. The burden of proof is on the creditor and if they don’t provide it it will get dropped. If it’s $5000 that’s really not that much for medical bills and you can raise your credit decently without paying it.
I hope someone answers you. This is my situation also.
Medical bills are not a joke! I’ve actually been denied from a job because of this situation. Bless you, and hope we find our answer.
I am about to get some student loans out of collections. All I've had to do is pay $5 a month for 9 out of 10 months. My credit score is like 680 because I've been using a credit card and paying it and I've been paying my other student loans. I'm about to finish my fourth one of in the last like 9 months.
The only issue is since I'm in collections my loan options suck. I had to get a different car so I got something newer and it's 12.5%. However, I'll refinance in like 6 months and it should be less than half. Then I plan to pay about 1.5x the minimum so I can pay less in interest.
https://www.daveramsey.com/blog/ease-the-burden-medical-debt
One thing this link doesn't talk about is that medical bills are inflated so don't let the $5000 worry you since it'll most likely be reduced in your settlement. From what I've gathered from speaking to insurance companies, books and personal experience, one reason for doing this is for negotiation purposes since they know insurance companies don't always pay the full balance. Another thing you can do is ask for an itemized receipt to look at exactly what they're charging you for(I've done this myself and some of the charges are ridiculous). It's always good to call to get some communication going. Don't be afraid because they're just regular people doing their jobs. There are some assholes and some do try and use intimidation tactics but it only works on the uneducated. If they do decide to settle make sure you get it in writing or email in detail! Don't pay the settlement until you have that proof
Side note: you're able to contact Experian and allowed up to 250 characters(not sure if that's exact) on a negative mark on your credit explaining the situation and how it was resolved, so when a company runs your credit they'll see it and have a better understanding of the mark and even let you explain further which helps a lot. Remember they're just people as well and everyone knows shit happens!
I'm on mobile so I hope this isn't all messed up and the link works
This really did help! Thank you!
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My FICO went from 0 to 740 in 18 months because I paid $1500 a month toward it. Everything goes on the CC; rent, food, gas, etc. and no APR during the first year. From $1500 to low 5 figures credit line.
I make about 55k/yr if that helps, had recently lost a union job that paid next to nothing. Working in the construction field and working 12 hour days changed a lot too. I swiped the last 3k on my car, helped a lot with no APR. Got unpaid old bills, more than 5 years. I dunno how I got here, but that's my story.
This is inspiring to me. I’m in very much the same situation. Student loans I’ve been afraid of for years and no credit cards for over a decade. I just got a secured CC to build up my credit and actually got my credit score to see where I’m at officially with everything. It’s not as bad as I thought and seeing that this can be done gives me hope. Thanks OP!
Really need to hop on this student loan thing. The anxiety is brutal though
Congrats on the great work!
I can relate to the anxiety of paying what you think you can't afford. I was right there with you with student loans and my car payment. Its interesting what happens when you just call your debtors and let them know about the situation you are in. I found all of them extremely flexible and they helped me set up payments I could actually afford, even my car loan people!
Fast forward nearly 8+ years later and my credit is GREATLY improved and my late/missed payments have started to fall off.
I'm very proud of my 100% on time payment history https://imgur.com/hXYpACs https://imgur.com/sO3Rz7P
Whats the website in yer screenshot?
Dave Ramsey would tell you not to have financed the car in the first place.
Once you're debt free, you don't need to finance things anymore because you pay cash.
If you went bankrupt, had a CDJ or an involuntary agreement with any creditors your credit score will still be fucked for at least 6 years after the agreement ends, even if your credit score is high
And you may be black listed from certain creditors depending on who your bad score creditors associated with
But after 6 years it’s probably good and you’ll be able to get a mortgage/remortgage, etc
EDIT: Alternatively if you used a 0% APR or remortgage for debt consolidation, that’s the good shit
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