Personal experience: how I improved my credit rating by 134 points in less than a year
Credit rating affects many factors of life in the USA. Laura Dan told readers Business Insider her story from the bottom and how she managed to improve her credit rating by 134 points in less than a year.
Next - from the first person.
Less than a year ago, I was overweight and lacking in motivation, and I also had a 568 credit rating. Credit Karma, VantageScore and FICO considered the rating as “bad”. I hit my bottom and changed things dramatically - not only did I lose 30 pounds (13,6 kg), but I also improved my credit score by 134 points. Now it is 702 points. Here's how I did it.
The process of increasing my credit rating on 100 with extra points can be reduced to seven steps:
1. I checked the rating myself
In January, the first thing I checked was my credit cards, car loans, postgraduate loans and various personal debts. Here's what my credit card debt at the beginning of the year looked like:
- PNC Core: $ 6 - 323,57% APR
- American Express: $ 4 - 520% per annum
- Bank of America: $ 3 - 012,58% APR
- Chase Slate: $ 1 - 817,47% APR
- Best Buy: $ 1 - 580,76% APR
- PayPal MasterCard: $ 696 - 28,74% APR
- Macy's: $ 392,83 - 27,49% APR
- Target RED Card: $ 244,51 - 24,9% APR
- Victoria's Secret: $ 41,21 - 26,99% APR
Together, this amounted to $ 18 628,93 (Compared to my former high of $ 23 000).
- PNC Core - $ 4 ($ 604 less)
- American Express - $ 228 ($ 4 less)
- Bank of America- $ 2671 ($ 341,58 less)
- Chase Slate - $ 1524,60 ($ 292,87 less)
- Best Buy - $ 1311 ($ 269,76 less)
- PayPal MasterCard - $ 0 ($ 696 less)
- Macy's - $ 0 ($ 392,83 less)
- Target RED Card - $ 0 ($ 244,51 less)
- Victoria's Secret - $ 63 ($ 21,79 more)
The total debt on my new credit card is $ 10 - I paid $ 401,60 in 10 months.
As for my car loan, I paid it back in May 2019 of the year.
Most of my debt comes from a graduate school loan. At the beginning of the year, the balance was $ 32 304,84, and currently the total is $ 31 918,58. Debt decreased by only $ 386,26.
On the subject: How to get the perfect credit rating
2. I calculated the budget
Then my fiance helped me put everything on Google Sheets: all the balances on my credit card, monthly bills and upcoming expenses. He created formulas that show how much I have left after paying all my bills every month.
This has changed the rule of the game. When I see everything electronically, it’s easier for me to regulate my expenses. Knowing my goals and seeing debts and expenses, I became more responsible.
3. I checked my credit rating
When I checked my credit rating on January 10, it was 568 points. Ten months later, he grew by 134 points to 702. Half of these points came from the most amazing thing of all.
One day in May, I accidentally looked at my Credit Karma app when I noticed that I have a balance of $ 12 000 in my Discover account. I was scared since I closed my Discover account more than ten years ago.
On the subject: 8 tips how to build a good credit history in the USA
The Discover operator informed me that I am an authorized user of a family member account. They removed me immediately, and the next day my credit rating increased by 50 points!
4. I take salary very seriously
My company pays its employees once a month. As soon as I get paid, I proceed as follows:
- I put $ 1200 on my credit cards.
- I determine how much I put on each of the cards; Here is what I paid in October:
- $ 772 on American Express (21,49% per annum) - it was one of my biggest leftovers.
- $ 173 on PNC Core (4% APR). The only reason I don't pay anymore is because of the low interest rate.
- $ 90 in favor of Bank of America (22,74%)
- $ 60 on Chase Slate (24,74%)
- $ 55 at Best Buy (26,99%)
- I pay more than the minimum payment (at least a few dollars).
- I check the Credit Karma app at least once a month.
- I update my credit card balance on Google Sheets, which always encourages me to continue paying off my debt.
5. I began to take less on credit
Last February, Johnny and I entered Dave Ramsey's Financial Peace University. Then I stopped taking loans.
On the subject: 5 main mistakes when trying to solve a problem with a loan
Even when I paid with several credit cards (Target, Macy's and PayPal), I left my account active to show lenders that I can be responsible for the loan using only a small percentage of my total credit limits.
6. I increased my credit card payments
In 2018, I allocated $ 300 monthly to pay off my credit cards. I increased the payment to $ 915 in February, then to $ 1200 in June (after I repaid my car loan).
7. I was looking for part-time jobs
Paying $ 1200 per month with a credit card is not easy. Working as a freelance employee helped me earn extra from $ 200 to $ 1200 dollars a month.
In a few years I want to buy a house, but with a low credit rating it is difficult.
Thanks to the above seven steps, my credit rating has improved like crazy. Hopefully I will be much closer to 850 points next year.
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