Friday, October 14, 2016

Raise Your Credit Score FAST | Pt 1

IMPORTANT NOTE: Let me preface this series by explaining that when I say you can raise your credit score "FAST", I don't mean impossibly and illegally fast. Not like those handwritten signs on th side of the road promise to do if you'll just call them. ::sigh:: I mean, seriously? These signs are all over the place down here in Atlanta and I just shake my head and want to call them just to say "Man, if you can't afford to professionally print your signs, what makes you think I'm going to trust you with MY finances?" But I digress!! When I say "FAST" I mean a reasonable kind of fast. The kind of results I have personally seen in less than 6 months. It didn't take you 3 days to completely demolish your credit and get into debt, did it? No. So it's going to take a little bit to fix it. You ready? Here we go!



If you've been reading my blog for awhile, you may remember how I did a short series (very short...hahaha) series on trying to buy a house with bad credit, including a prior foreclosure.

As you know, we found a house we absolutely loved and were looking into buying (Read about that HERE). Only to be told that we had several strikes against us:

1.) My husband's credit score was extremely low (I have nonexistent credit, believe it or not. The bank actually did a triple take when they looked at my file...there is none. That's right. Livin' off the grid, in a manner of speaking. hahaha)

2.) We are self-employed and at the time we had only been officially in business for a little over a year. The lenders that we inquired all told us that it was a big risk factor and that they required our having been in business for at least 2 years


So...basically...NO WAY, JOSE...Try again another time!!

Well, most of you know that we ended up getting a phone call out-of-the-blue from one of our clients (who has also become a friend) and he told us about this house he had just bought and would we like to rent it? (read about that HERE if you missed that amazing story)

And that pretty much brings us up-to-date on that front.

We're here in this house. Unfortunately, the landlord is wanting to ask an astronomical sum of gold for this house (ahem...over twice what he paid for it). Even if we could get approved for it, I don't want to get ourselves that deeply in debt.

However, we signed a 2 year lease and have that time to clean up our credit.

And we have been working on repairing it and building it up.

More on that in a second...

By the way, our business is going super-strong. I'd guesstimate that we've quadrupled in size since Year 1 (we are currently in the middle of Year 2)...and we barely advertised this year! Word of mouth is really blessing our family business! So that takes care of the lenders' fear of our company not surving more than a couple of the years.

Now onto what we're doing to repair and build our credit:

(and by "our credit" I mean my husband's credit...his is what they are looking at for loan approval...I'll take care of mine later)

We signed up for a free Credit Karma account to monitor our credit scores.

His score was bad.

Like, in low-mid 500s bad.

Okay. ::deep breath:: It's going to be okay. Let's just take this one step at a time....

We decided to begin tackling our debt (which was actually quite small...I think our biggest issue was that we had a few open delinquent accounts and no credit cards).

Antonio went to the bank for a sit-down with the mortgage lender. After all, who best to get advice on what needed to be done in order for them to approve us, right?

We thought that maybe just paying off our delinquent accounts would be enough. However, the mortgage lender said that it wouldn't be enough. We would also need to get a secured credit card through the bank. Do NOT just get any prepaid credit card! In order to build credit, you need one that regularly reports to the major credit reporting agencies. The agencies that determine your credit scores.

So we applied for the card, put down the required $300 "deposit" and asked for instructions on how to use it properly to build credit.

They said that under NO circumstance should we go on a shopping spree of any kind.

They said to put no more than $60 per month on our card. That is just 20% of our credit limit.

We are to pay that off by the due date each month.

They promised that, if we follow these instructions faithfully, we would see a rise in our credit scores within a few months.

All righty then.

I'll admit it: I didn't believe a word of it. No way could something that simple have an effect on something as major as our credit scores.

But I decided to give it a try...even if it was just to tell my husband "I told you so."

(Spoiler alert: I was the one who was wrong!)

We began using our credit card in June 2016.

Their instructions were clear and we've been following them pretty religiously ever since. Or so I thought. I just found out today that Antonio is actually going way over the recommended 20% but is still paying in full...I need to talk with him about the ramifications of that tonight. It's all in black and white over on Credit Karma's site with their Credit Adjuster tool. It shows how his credit would be if he was following their instructions exactly. Hint: it'd be much better than it is now.

Well, that's the end of Part 1 of this series, how we're rebuilding our credit. Be sure to follow my blog (or hey, come "like" me over on Facebook!!

You can follow my blog or find me at www.Facebook.com/IsItNaptimeYet) for the next part of my series: How To Fix Past Credit Mistakes/Clean Up Bad Credit! (including some tips on what to do if something is wrong on your report and how to negotiate with collection agents)

Until next time! xoxo

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