FYI: I’m not selling anything and I’m not affiliated with any credit card company.
A few years ago I started using this credit card card to repair my credit. The best part is that the card has no annual fee and it’s so exclusive, I’m the only one that has it. Here’s what it looks like:
For reference this card:
- Helped me increase my credit score over 200 points.
- Has no annual fee whatsoever.
- Makes a mockery of America’s propensity for fetishizing consumerism.
But first, some backstory:
When I started my first company, I was straight out of college and only had a few thousand dollars saved up for expenses. I also had a few credit cards with an aggregate limit of around $5,000. After months of failing to get the business off the ground and running out of savings, I started using my credit cards as extra runway. I don’t recommend this at all; but it allowed me to keep doing what I loved and avoid getting a “real job.”
For the next six months, I ignored calls from debt collectors and tried to focus on helping get something off the ground with my co-founders. At one point, the endless stream of phone calls was so bad that I turned my phone on do-not-disturb mode permanently and only allowed calls from contacts.
It had been almost a year since making a payment before I received my first paycheck from Soylent and was able to start paying my debt off. By the time I finally did, my credit score had dropped to 561. For reference, the average American has a score of 687 and I was clearly not credit-worthy. I didn’t think it was a big problem. I had no plans to purchase are car or house anytime soon, but we needed to lease live-work space for Soylent, and my low credit score was making that almost impossible. In the long run I had to attach a full page letter explaining how I ruined my credit and ask them to make an exception for the lease.
Rebuilding my credit:
With Soylent in a new HQ and paying me a stable salary, I decided to see if I could fix my credit score. There are two main activities that allow you to increase your score: removing old, bad things (like missed payments), and adding new, good things to your credit report (like on-time payments). Both of these activities are a bit counter-intuitive at first, so I’ll explain one at a time.
Removing negative items on your credit report is such an important element and it really highlights some of the ridiculousness in the consumer credit industry. The three credit agencies, Equifax, Experian, and TransUnion, along with your bank all maintain separate records of your credit history. You can request that they verify every negative item and show you evidence. Often times, records get lost or they simply don’t want to take the time to argue with you and will remove the item. This is such a common practice that “credit repair” has become a sizable cottage industry and you can now outsource this entire process for a few hundred bucks. I wound up finding a local expert on Yelp who helped remove nearly all of the negative history by submitting evidence inquiries for me.
On the flip-side, it can be difficult at first to create positive new credit history when you are ineligible for just about every loan out there, but fortunately secured credit cards provide a way forward. These cards are “secured” by a cash deposit that you make with the bank that gives you the credit card. Everything else about the card is normal, so it can help boost your score if you pay on-time, but if you fail to pay, the bank can use your deposit to pay off the balance. Not every bank offers secured credit cards, so you have to shop around a bit and, even then, some banks will charge higher deposits. After calling a few banks, I found a local Wells Fargo that had a secured card and went to apply. I deposited $800 with them and in a few days received a secured credit card with a credit limit of $600. I linked the card to my Spotify account and set up auto pay so I would have a low (but non-zero) credit utilization rate with a steady payment history.
Making credit repair fun:
At this point, it was really just a waiting game to allow the positive payment history to build up, but I was getting bored and wanted to see if I could make the whole process of credit building more interesting. Rap Genius has 93,453 results for songs containing the lyric “Black Card” and listening to any of them make it clear that getting a black card is an extremely desirable status-symbol. I thought it would be funny to figure out a way to get an extremely exclusive looking black-card despite my embarrassingly low credit score. The solution was sitting right in front of me with Wells Fargo’s Card Design Studio. It allows you to upload any image to be printed on your card. It’s designed for people to put pictures of their family, but the system will allow you to print essentially any image that isn’t vulgar or under copyright.
I knew I wanted the design to poke fun of the culture surrounding fancy black cards, so I put some text together with an outline of the wall street charging bull in Photoshop and uploaded it to the Card Design Studio and a few days later, I received this:
The design served as a humorous reminder of America’s frivolous consumer culture and wound up boosting my credit score over 200 points. The trick was just having the patience to wait and let on-time payments rack up and self-control not to overspend and raise my credit utilization.
In general, I think the credit card industry is extremely predatory. They aggressively market to kids as soon as they turn 18 and do little to educate them on how credit scores are actually calculated. I’ve seen plenty of intelligent people get sucked into credit card debt simply because of how easy it is to spend more than you actually have. Balancing your credit card spending with your current cash holdings and future cash-flow is harder than we often acknowledge especially when you’re trying to do it all in your head. Unfortunately, because credit scores determine mortgage rates, learning how to use credit cards effectively can make a big financial difference down the road.
Be like Warren, not Wayne:
When it comes to personal finance, it’s generally better to think like Warren Buffet than Lil’ Wayne. Warren Buffett counts out exact change for his McDonald’s breakfast every morning (someone should get him a Soylent subscription!).
Lil’ Wayne on the other hand, is constantly bragging about his black card, which probably has a ridiculously high annual fee.
Hopefully he’s watching his credit score!
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