Tips and Tricks

Building or Repairing Your Credit Score

When you have a bad credit score, it can be disheartening and frustrating. Having chronic illnesses my entire life has made it a struggle to have a decent score. I let accounts go when recovering from health issues and being out of work from surgeries. However, I also never tried to fix them until recently. Part of me thought, “What’s the use?” I was wrong; it was not impossible and you can still make an effort. Plus, we want to buy a house and you cannot do that with shitty credit.

First, you want to monitor your score. I downloaded the Credit Karma app, a free app that allows you to monitor your credit for free. You don’t want to have to pay for your report and you also don’t want a hard inquiry, which can affect your score. So, keeping an eye out with Credit Karma is ideal. Also, try to avoid bills from making it into collections. If there is a bill you can’t pay, call and explain your situation. I call the hospital once a month and pay $5 towards a bill to keep it from going to collections. They don’t like it but they can’t say no.

When I started my journey last year, my score was under 500. I had several collections and truth be told, I never really paid attention or cared to keep an eye on my credit. I truly believe that this should be a lesson in high school, but that is another topic for another day. First, I started with setting up a payment plan for my school loan. I had paid off a loan entirely and didn’t realize I had another school loan in default. Oops! After 9 months, I was out of default with consecutive payments proving my responsibility. This did not necessarily increase my score but it removed a collection from the derogatory marks. It is not always about the score, which is important, but also about how many items are in collections.

I had several derogatory marks. One was an $850 collection I had; I called and set up a payment plan to pay it off in about 8 months. It feels good to settle debts and see your collections disappear. Again, this did not increase my score much but it helps the other areas that are looked at when your report is pulled.

My absolute favorite way that I increased my credit score was with an app called Self Lender. This app has increased my score more than anything else I have tried and it is also a great way to save money. I downloaded the app and chose the second plan. The first plan is $25 per month for two years but I chose the $48 per month for one year. This plan increases your score a little more that the $25 one, in comparison to my husband who chose that plan. Basically, you (self) lend to yourself and it reports and builds credit! At the end of the year, I will get the money back that I paid into the account while I successfully increased my credit. I went from 500 to 600 within 6 months!

Another option is opening a secured credit line at your bank. Many banks offer $200-$500 limits. My husband set his up at my bank for $300 (their minimum). You treat it just like a credit card, only it is your money. You don’t want to max it out. Just use it for small things, like gas or lunch. Aim to keep your balance low and pay it on time, otherwise you are defeating the purpose and it could lower your score. I opened a secured credit line with First Progress. It is linked to my bill pay on my online banking app.

Making a list of what you need to improve is also a productive plan for fixing your credit. Occasionally people have had derogatory marks or collections that were not accurate. My husband had a collection that was a duplicate. Combing through everything is a way to ensure that everything is accurate. Disputing anything that is wrong is simple and also easy to do through the Credit Karma app.

The Fair Credit Reporting Act promotes the accuracy, fairness and privacy of consumers. Basically, the credit bureaus have 30-45 days to resolve a dispute. It never hurts to try. Another thing you can do, is call the actual creditors and set up a payment plan or negotiate price to pay off the debt. If an account status is closed or a charge-off then paying it off is basically useless, so focus on the open collections. Keep in mind that collection agencies buy debts for cheap so you can negotiate. If you hassle them back and say that you only can pay $70 for your $150 debt, chances are they will accept that or something close. I had a friend recently tell me that she haggled a $10,000 debt down to $800 pay off! Keep in mind that they will want that in one payment. Make sure you ask when it will be reported and for a letter as well so you can follow up on your credit report.

I had a 2014 lease broken in Missouri and they were going after me for $8,758. That was excruciating. After months of phone tag, negotiations and frustrations, we finally agreed on a full payment of $3,000. I asked for a debt settlement letter and fortunately they were scheduled to do their monthly reporting to the credit bureau the following day. This was the very last thing holding me back from buying a house, because it was an open collection and at that price. If I had the time, I could have set up a payment plan and after 6-9 consecutive payments, it would have shown I was working towards paying it off. That works too, but we are trying to buy now and didn’t want to renew our lease another year.

Another cool way to give yourself a boost is through Experian. They have something called Credit Boost that links your utility payments. It added my phone bill and electric bill and I got an 8 point boost!

Now that you have a better understanding of some tips and tricks, you can continue to improve your score and create responsible habits that will keep your score up. Though I still have work to do, I know each month my score improves and that it doesn’t happen overnight or all at once. Be patient and vigilant.

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