I don’t regret filing for bankruptcy. Yet, running up 80,000 in credit card debt for what amounted to a lot of fun and games isn’t something I am proud of. Working on try to get my finances back on track is something that I DO take pride in.
This is not to say it hasn’t been a bumpy road. Living within my means it not anything I am accustomed to doing. I calculated the other day that I have spent over half my life in a state of financial stress of some kind, wondering how I was going to make bills. Not exactly living your best life.
So lately, a combination of a real salary and finally getting my debt under control has meant that instead of tossing and turning about making my house payment, I can now toss and turn about earthquakes and world peace.
The only thing that still continues to haunt me is my credit score. This might be a Captain Obvious moment, but a bankruptcy really does a number on your credit score. I have been trying for almost two years to get a Home Equity Line of Credit to do an addition to my home. I finally got one recently, but not for the amount I needed. This addition is really me eating the elephant one bite at a time, but more on that at a later date.
During this HELOC quest, I did learn a lot about how you can increase your credit score. Some of these might sound a little sketchy. Your financial advisor may not give you these suggestions, but straight up, these work. Here are my top three:
SIZE MAY NOT MATTER, BUT WHEN YOU PAY DOES
Everyone knows if you don’t pay your credit card payments on time, it has a negative impact on your credit score, but the other important date you have to know, is what date does your credit card report your balances to the credit bureaus. This is important, because if you can pay it down before it reports or better yet, pay it off before it reports, you get an instance boost to your score. I did mention slightly sketchy, so what I did was kind of move the payments and balances around to match the reporting dates. Yes, a bit of a balancing act, but if you are trying to make a major purchase and need a little bump, this works. Credit Karma is a free website and although the scores they say you have are not 100% accurate, they are a great place to track when your credit cards report and also see how much credit you are currently using.
MORE CREDIT IS A GOOD THING
Yes, I the person who ran up more unsecured debt than what most people pay for a home, did write that sentence. There is, however, a big caveat. More credit is a good thing as long as you get it and don’t use it! What drives up your credit score is staying under 10% debt of all the unsecured credit you have available. So if you have only one credit card with a 1,000 credit line and you use 500 of it, you have used 50% of your available credit and your credit score will take a hit. Get three more credit cards with 1,000 credit lines, still keep the 500 balance and you are now using 12.5% of your available credit. Your score would soar with the same amount of debt. The trick is, one more time, keep the available credit available!
PERSONAL LOANS DO WORK CREDIT SCORE MIRACLES
Yes, personal loans show up on your credit report, but getting one to pay off unsecured credit card debt improves your credit score almost instantly. Lending Tree and Prosper are two I have used in the past. The interest rates are not fantastic, but they usually beat what you would pay on the credit card and overall, they are not overly difficult to get. One more tip from the “do what I say and not what I have done” gallery. The credit card debt you pay off, needs to stay paid off. The idea is not to run up the credit card you just got down to zero and have that AND a loan payment.
Of course, the best way to have a great credit score is to live within in your means, never have an emergency that requires going into debt and never buy anything you don’t really need. I am positive I am not going to manage doing all three of those things perfectly. That’s when a few sketchy tips can come in handy and hopefully, it will help you too.
This is not to say it hasn’t been a bumpy road. Living within my means it not anything I am accustomed to doing. I calculated the other day that I have spent over half my life in a state of financial stress of some kind, wondering how I was going to make bills. Not exactly living your best life.
So lately, a combination of a real salary and finally getting my debt under control has meant that instead of tossing and turning about making my house payment, I can now toss and turn about earthquakes and world peace.
The only thing that still continues to haunt me is my credit score. This might be a Captain Obvious moment, but a bankruptcy really does a number on your credit score. I have been trying for almost two years to get a Home Equity Line of Credit to do an addition to my home. I finally got one recently, but not for the amount I needed. This addition is really me eating the elephant one bite at a time, but more on that at a later date.
During this HELOC quest, I did learn a lot about how you can increase your credit score. Some of these might sound a little sketchy. Your financial advisor may not give you these suggestions, but straight up, these work. Here are my top three:
SIZE MAY NOT MATTER, BUT WHEN YOU PAY DOES
Everyone knows if you don’t pay your credit card payments on time, it has a negative impact on your credit score, but the other important date you have to know, is what date does your credit card report your balances to the credit bureaus. This is important, because if you can pay it down before it reports or better yet, pay it off before it reports, you get an instance boost to your score. I did mention slightly sketchy, so what I did was kind of move the payments and balances around to match the reporting dates. Yes, a bit of a balancing act, but if you are trying to make a major purchase and need a little bump, this works. Credit Karma is a free website and although the scores they say you have are not 100% accurate, they are a great place to track when your credit cards report and also see how much credit you are currently using.
MORE CREDIT IS A GOOD THING
Yes, I the person who ran up more unsecured debt than what most people pay for a home, did write that sentence. There is, however, a big caveat. More credit is a good thing as long as you get it and don’t use it! What drives up your credit score is staying under 10% debt of all the unsecured credit you have available. So if you have only one credit card with a 1,000 credit line and you use 500 of it, you have used 50% of your available credit and your credit score will take a hit. Get three more credit cards with 1,000 credit lines, still keep the 500 balance and you are now using 12.5% of your available credit. Your score would soar with the same amount of debt. The trick is, one more time, keep the available credit available!
PERSONAL LOANS DO WORK CREDIT SCORE MIRACLES
Yes, personal loans show up on your credit report, but getting one to pay off unsecured credit card debt improves your credit score almost instantly. Lending Tree and Prosper are two I have used in the past. The interest rates are not fantastic, but they usually beat what you would pay on the credit card and overall, they are not overly difficult to get. One more tip from the “do what I say and not what I have done” gallery. The credit card debt you pay off, needs to stay paid off. The idea is not to run up the credit card you just got down to zero and have that AND a loan payment.
Of course, the best way to have a great credit score is to live within in your means, never have an emergency that requires going into debt and never buy anything you don’t really need. I am positive I am not going to manage doing all three of those things perfectly. That’s when a few sketchy tips can come in handy and hopefully, it will help you too.
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