Since screwing up my credit during college (getting credit cards to buy food, etc), I wasn’t able to pay them off both (opened in 2007 and 2009) went into collections a year after. I didn’t know what to do and was given up on applying for credit cards and hoping those would dropped off the report. Fast forward to 2014 (when I started to make decent money and looking into rebuilding my credit report, I had to paid off one of the collection. After that was completed, the confidence and bad habits to apply for credit cards begins.
Signed up to Credit Karma/MyFico in early 2015 and noticed my credit score was around 610-620. Had 3 cards (Discover, 2 Cap One) until mid 2015 and a Chase(Amazon) afterwards. Since moving into a new town, commuting wasn’t great, so I got a used car. Went to DCU for a loan on $ 10K car. Used my annual bonus for the down payment. By summer, I racked up over $ 9K and basically was at 95% of the limit of each card (trips/outtings). In November 2015, my gf and I were talking about savings, when to get marry (2017-2018), and buy a house (2017 hopeful). The hardest part of that evening was confessing to her about my credit card debts (I have never told anyone about my debts and money usage as everyone thought I was well off). If you have never told anyone about your similar situation, find someone who you could trust and let it out. You’ll feel much better afterwards. We had a little argument, but she was glad that I told her.
Since the conversation, I took a few precautious steps.
1. Cut the two Cap One cards up.
2. Every bi-weekly check I received, will go straight into paying down the cards and rents/utilities.
3. Read more about paying off debts, etc. (Best advice, pay off the highest interest cards “one at a time”, and pay minimal on others. Instant gratifications)
Right after the discussion, I went ahead and paid off my Discover card, lowest balance to boost my credit score. Then came the highest balance Cap One, which was paid off mid-January 2016. For Chase, it took a few micro-payments as I have to juggle credits usage for food and gas since I don’t plan to save until all debts are taking care of. The balance went up and down. By February 1st, Chase was at $ 0. But then there’s a balance on my Discover card, as I move my spending to it. It wasn’t much since I made sure to have an autopayment on it. For the past 3 weeks of paying rent and debts, I got the last Cap One card down from $ 2800 to $ 1300 (Today). There’s a $ 300 balance on the Discover but that card is not due until March 8th, which pay day comes before then.
At this point, using the myFico app the scores are: Equifax-664, Transunion-663, Experian-693. I’m still not sure how EQ and Transunion score are calculated as those haven’t update much (Could be because of the 90% balance on the last Cap One). The Experian was at 688 since mid-January.
On another note, my last college collection…it was reported in 2011 with a balance of $ 1500. Any advice(s) if I should take care of this or let it drop off? We are planning to do some pre-mortgage planning this summer and I really don’t want it to affect anything. Thanks for reading this as I think it was one of the best thing I could have done to myself for 2016.