How I Built My Credit Score
In February 2013, right after I just started working at my first job, I opened a secured credit card with Wells Fargo. I didn’t have any credit history at the time besides unpaid medical bills so I decided it was the right time to start building some good credit. A secured credit card is a line of credit that is secured by your own money and it’s also reported to the major credit bureaus. After you show a great credit history for 6+ months you can check to see if you’re eligible to graduate from a secured card to a regular credit card. Once you’re eligible, the bank refunds you for the original amount you opened the credit card with and awards you with a line of credit. I put $300 on my secured card to begin with and after 6 months I was upgraded to a $300 credit limit. September of that year I took out an auto loan with Ally for $26,363. I always paid a little more than what was required for my car note. In March 2014, I was approved for a $3500 credit line at Rooms To Go and paid off my furniture within 6 months. Lastly, within the same month of March, I applied for a credit card with capital one and I was approved for a $300 line of credit.
There are several ways I increased my credit score. I made sure to never use more than 35% of my credit limit on each card. I always paid off the balance in full each month before the due date. If I had a balance left over I made sure to pay it off within 3 months at the most. Every 6-8 months I call Wells Fargo and Capital One and request for a credit line increase. I’ve been doing this for about 3 years now. I started with $300 and currently have a $7050 credit limit with Capital One. I also started with a secured credit line of $300 with Wells Fargo, graduated to a regular credit card, then eventually got increased up to $2100 (They’re stingy I know). I didn’t ask for increases with My Rooms To Go in store credit card so it stayed at $3500. I have a total credit limit of $12,650 with 0% utilization. A higher credit line with a low utilization looks real good on your credit.
I had several medical collections on my credit report that were hurting my score. I called all of these collection companies to see if I could work out a deal to get them removed from my credit history if I were to pay.
Collection agencies are not obligated to stop reporting your debt once it’s paid off, but it’s always worth a shot to ask. Otherwise, it takes 7 years to be removed from your credit report. I explained my situation, how I was a broke college student and couldn’t pay the medical bills on time, two of them just didn’t care lol.
But one of them agreed and I paid off a $703 medical debt (sucks I know) but the collector did agree to remove the debt off of my credit report. This increased my score by over 40 points in one month!!! Something that little can be the reason why I save thousands over the life of a loan.
Reminder: Paying off collections won’t increase your credit score, it has to be removed from your credit report in order to increase your score.
Building credit takes patience and great habits. It’s not going to happen overnight. You have to continue to practice great credit habits and be responsible. I never missed a payment since I opened a credit card or loan. If you’re having trouble paying your bills, try calling your creditor. They are always willing to help or set up payment plans for you. If you practice great credit habits you will see results.