Lately, I have been obsessed with personal and business credit. I’ll be transparent and say my scores were not the best. I’m researching, testing and succeeding in raising my credit score. My score has increased by 86 points (on Credit Karma) since July 6, 2016.
In large part, I must thank http://www.Credit Karma.com for giving me a free, painless look at my score. The scores on Credit Karma are not the same as those pulled at car dealerships and mortgage companies but it was a way for me to begin this journey. As a Realtor, the biggest challenges I see for new homeowners are down payments and credit scores. I’m documenting my journey because I know someone will be helped.
July 2016, The Beginning
I was overwhelmed by credit in college. It was so easy to get a credit card. My family did not teach credit management. I never knew what to do. No blame. At the end of June 2016, my scores were not looking so good. Credit Karma (CK) says my scores were 539 on TransUnion and 552 on Equifax. In actuality, they were a lot lower; they were in the high 400s. I have collections and charge offs. (really transparent here) CK suggested I open two credit lines or in the industry we call them trade lines. The last installment loan was my then new car that I paid off 6 years ago.
The first thing to do is get some credit. Now with scores like mine, a secured credit card was is in my future. If you don’t know what a secured credit card is, it’s going to a bank such as Wells Fargo and deposit money for a secured credit card. The balance of the card is based on how much you deposit. It can be as low as $200. After about a year of on time payments, they return your deposit and now you have an unsecured line of credit.
I found a second method that may not be the best overall but it has been working for me. The first card I got was a clothing store that I will call STORE CARD A. I’m not a big shopper but it was a start. I went to their store online and I found a few items. As I was going to pay, a pre-approved offer popped up for $500. Two great things occurred:
- I had a $500 credit line
- It was not a hard pull on my credit (A hard pull on your credit is when your score drops after a company runs your credit. Your score can drop 0 – 10 points in some cases.)
In my research I found my credit use or utilization should be under 30%. I charged $150 (exactly 30%) which included tax and shipping.
I also got another clothing store card, STORE CARD B. The balance was a lower at $200. I mentioned this only to emphasize I bought one thing that was $60 (30%) to keep my utilization low. My goal is to get larger credit lines that are not store cards. I immediately paid STORE CARD B off. I made a large payment on STORE CARD A.
At the end of July, I had my first big score increase of 18 points.
This is great two lines of credit. Now what?
More journal coming up . . .
Talk to you soon.