How I Saved My Credit Score And Changed My Finances Forever
Happy Wednesday from Medean! We will occasionally share stories from our users on how they’ve achieved their personal and financial goals, this week’s story comes from Corey! Interested in having your story shared on the blog? Send us an email!
There’s no debating it, your credit score is important. It helps determine what kind of credit cards you qualify for, what interest rates you’ll have to pay, and even helps decide whether you’ll ever be able to buy a house! But what if your credit score is terrible? Should you just pack it up and accept the fact that you’ll be in financial purgatory forever? Absolutely not! There are steps you can take to boost your credit score, and I’m here to tell you how to do it. My name’s Corey, I want to tell you all the story of how I boosted my credit score from a 520 to a 750 and how you can do the same!
Before I get started, here’s a little more about me. I was born and raised in Philadelphia, and am currently an IT administrator for a plastic surgeon in Philly. I, like many other people in this country, racked up a ton of student loan debt in college and had no way to pay it off. To handle the situation, I did what any other guy would do: I moved to Hawaii to get off the grid and escape the bill collectors.
Unsurprisingly, I learned pretty quickly that going AWOL was not going to solve my financial situation. I moved back to Philly, got a job to start making an income, and decided to get a credit card so that I could start earning some rewards for spending my newly acquired funds. I was declined for every card that I applied for, which is when I learned that I had a 520 credit score which is basically financial no man’s land.
If your credit score is low enough, people will try to sell you services that restore your credit, but those are insanely expensive. I knew that I could get my credit score back to normal myself, and set out to go do it.
The first thing that I did was reach out to the various credit bureaus (TransUnion, Experian, etc.) to get a full assessment of my credit score and learn what was bringing it down. I learned that if you’re a first time offender in default there’s a program called the Student Rehabilitation Program that will remove all derogatory marks from your credit record if you complete the payment plan that they set up for you. They only allow you to do this program once so make sure you’re ready to pay off your debt when you use it, but if you’re underwater you should look into it!
In a strange twist, once I started paying off my debt the loans that had been killing me actually started to help because they were long-standing credit. I now had a balance that I was paying off consistently and so that payment history boosted my credit score! I buckled down and paid off my student debt over the next two years or so, and felt that my journey was nearly complete. It wasn’t.
Once my student loans were on track, I started tackling every other outstanding bill. These proved to be a huge challenge, I had to negotiate with each company who I had debt with and convince them to take a lower amount than I owed if I agreed to pay the amount in full. These conversations were uncomfortable and sometimes involved me pleading to get my bill lowered, but I was desperate to do anything I could to get my credit back on track. Companies write off a certain amount of debt every year that they assume won’t be repaid, and so most were willing to accept a lower amount to ensure that my debt didn’t fall into that category. I made them agree to remove all late payments from my credit record if I paid in full, that was key to getting my score improved.
Companies write off a certain amount of debt every year that they assume won’t be repaid, and so most were willing to accept a lower amount to ensure that my debt didn’t fall into that category. These conversations were uncomfortable and sometimes involved me pleading to get my bill lowered, but I was desperate to do anything I could to get my credit back on track. I made them agree to remove all late payments from my credit record if I paid in full, that was key to getting my score improved.
Another trick that I learned was to just dispute every outstanding loan that I had to see if it would work. While it wasn’t totally effective, I did succeed in having a few loans reduced which saved me a pretty big chunk of cash. Negotiating with these companies required realizing who I was working with and partnering with them to get my debt settled. If the company helped me by agreeing to take a lower amount, I would help them by paying the remaining debt in full on time.
By that point, I had managed to get my credit score up to about 630, which allowed me to apply for a mortgage. I was tired of paying tens of thousands of dollars a year on rent, I wanted to have something to show for my monthly housing payments. Unfortunately, the mortgage officer I was working with told me that I still had to get more derogatory marks off of my report. It was back to the drawing board of pleading with companies to remove my derogatory marks, but I was getting pretty good at it at that point and successfully convinced the rest of my debtors to remove my derogatory marks which brought my credit score up to 700 for the first time, it was a miracle!
My friends also stepped up to help me improve my credit. One of my buddies who has amazing credit added me as an authorized user to his credit card. It was very little risk on his part, he never gave me a card so I couldn’t use his credit, but adding me to his credit card boosted me from a 700 to a 760!
This wasn’t an easy process, it took about two and a half years and a ton of hard work to get score from a 520 to a 760 but it was so worth it.
I went from relatively homeless to getting my insurance premium lowered, securing a competitive mortgage rate, and qualifying for better credit cards with rewards for spending. Changing my attitude about my debt was the key to turning my credit score around, creating a plan with each of my debtors on how I would pay them off was key but I had to get them to commit to removing my derogatory marks in exchange for me paying off my debt in a timely manner.
Now that I’ve successfully raised my credit score to a healthy level, the key is to keep it high. I pay my credit card and mortgage payments on time every month, I make sure my credit card balance never exceeds 30% and I’m much more mindful of my spending. I searched for the best mortgage rate and learned that lenders will compete with each other for your business, you’ll get a much better rate if you take the time to research! I also use apps like CreditKarma to track my credit score and Medean to ensure that my spending and savings levels aren’t getting out of control.
If there is any last advice I would leave you with, it’s this. If your finances are getting out of control, you need to change your mindset. Being negative about your finances will never solve your financial issues for you. I tried to run away and it didn’t work. Even if you see tens of thousands of dollars in debt, you can do it. It may take some time, but with perseverance and a focused effort, you will succeed. And believe me, if I can do it, you can too!
Loved Corey’s story, and want to learn how you can accomplish your personal and financial goals at the same time? Check out Medean, the budgeting app that’s using data-driven insights to help you save more and spend smarter!
