When I first checked my credit score I was sitting around a 520 and badly needed a new car. However, with a score like that, and of course no money saved (paycheck to paycheck life), I felt like there was NO way I was going to get a new (used) car. However, after talking to one of my friends about how to clean up my credit I was well on my way!

The first step I took was in contacting Lexington Law. I was very hesitant about this company because I’d never heard of them and they charged monthly for their services ($80-$100). I read many good and bad reviews about this company online and just wasn’t sure which one I’d end up being. However, I greatly trusted this friend and their recommendation so I tried it. I was on the phone for quite a while with a representative who answered all of my questions and then some. I felt really good about it so I chose the $100 package because I could log into my own custom website and not only see what they were doing to manage and fix my account, but read lots of tips too. They always did work on my account, many negative things were removed from my credit (update on my webpage each time), they educated me in things that I could do, myself, to better my credit, and once I cancelled they offered a lower rate for slightly different services, which I took the up on for a month or two, before I cancelled without a problem. After about 8-9 months of using Lexington Law I cancelled their services as I felt there was nothing more they could do. While they offered other services for different, lower, prices, they didn’t pressure me into staying and I had no issues with continually being charged.

Before I tell you some of the things I learned from Lexington Law I also want to talk about a few other credit sites as well and then I’ll cover all of the things I learned about credit management. If you don’t have or don’t want to pay $80-$100 a month then at least set up a Credit Karma account –IT’S FREE! This way you can at least know your score, have access to some basic information, and get credit card recommendations based on where you are in your financial situation. My Capital One card also has a credit tracker called “credit wise” so if you do have a credit card some have their own trackers as well. The one drawback about Credit Karma is that I’ve been told they can be up to 20 points off (meaning if they tell you your score is 580 it could actually be 560) so just err on the side of your score could be lower. (As I’ve been told for a house your credit score needs to be at least a 640 for the bank I was contacting.)

Now, what I’ve learned. First of all, the major thing that Lexington Law helped me with is getting my reports, which you can do by contacting each of the three credit bureaus: Equifax, Experian, and TransUnion. You are entitled to one free credit report from each of these agencies every year. You can request them all at the same time or throughout the year. My only problem stemmed from the fact that Experian had a free trial and then charged if you didn’t cancel, which you must call to do. I had a poor experience with Experian myself, so watch out for them! Once you obtain your reports look them over. Lexington Law sent letters on my behalf arguing for some things to come off of my report that were not accurate, for instance, my name was misspelled quite a bit. They also argued for some things to come off of my report due to certain financial hardships: military, medical, and one other which has slipped my mind.

One of the big things that hurt my credit was in looking for a car the dealers would run my credit to not only one bank, but many! When they do this it puts an inquiry onto your credit, which won’t come off for a year! And when you have many inquiries and you’re being turned down it hurts your credit. So make sure dealers aren’t racking up mass amounts of inquiries on your credit and be sure where you’re going to buy a car from before you let them. Some places can do what’s called a “soft inquiry,” which won’t affect your credit in the same way a “hard inquiry,” such as these car loans, would.

Something else Lexington Law suggested was to get a card with a high limit and keep a low balance on the card. This gives you a better credit-utilization ratio. If your credit card limit is only $200 and you keep $150-$200 on this card then it’s showing you heavily rely on your entire credit line. Obviously it’s easier if you have a credit card with a $2000 limit and have $150-$200 on it, but keep as little on the card as possible and either request a limit increase (probably after 6 months) or wait till they send you an offer of increase. For instance, one of my Capital One cards sent me an offer that if I pay either the full balance or at least $50 a month for 6 months they’d up my limit $300. While this can be difficult for those living paycheck to paycheck one of the suggestions Lexington Law gave me was that if someone trusted me I could ask them to put me on one of their cards as an authorized user (that had a high limit with a low balance) so their good credit would help me establish and better my credit.

Another aspect is having a good credit mix. This can include mortgages, student loans, personal loans, credit cards, car loans, store cards, etc. Basically it shows you manage money, budget, and spend wisely. If you don’t have a mix it doesn’t hurt your credit, but having a mix just shows you can handle different types of loans. The major factors of your credit are: length of credit, payments history, credit mix, new credit, and what you owe.

A tip my mother gave me in betterng her credit is to shop like it’s coming right out of her account. For store cards like JCPenny, Younkers, and Target she’d put money on the card (clothes or groceries) and then pay it off right after her purchase. This way she got the credit and either paid little or no interest. Interest is a huge factor –while you may or may not know.

I always look for credit card deals where there’s no interest for 6 months to 1 year. I had a Capital One account that was no interest for a year and put all of my purchases on it, paid it off, and made sure it was paid off before I’d start being charged interest. Then I found a new offer of no interest for a year and now that’s the card I use for bigger purchases. I put all of my vacation costs on this no interest card and used the money I saved up to pay it off. This way it shows I’m putting something on the card, not paying anything for using the money, and it’s getting paid off with money that was set aside for those expenses.

Another tip I have is to pay early, often, and over. I tend to not wait until the due date, unless absolutely necessary. I also pay more as often as I can, whether it’s $5-$50. When I first bought my car my payments were $198 and some change. I always paid $200 even. After a few months I saw my payments being lowered already. After paying less than $2 more a month for 10 months my payments are already down to $185.15. However, I keep paying the $200; I mean, I did budget for it! In fact, after a year it’s recommended to refinance if you’re in a good position, which I am with how much I’ve been working on my credit, and to refinance with a credit union for a better rate. Once I do this, which will probably also lower my payments, I’m still planning on paying the $200 a month, because, again, I budgeted for it and the extra I pay will chip away at the principle interest which helps in the long run –as you can see. Not only do I pay over the minimum amount, but I also pay extra. If I have extra money sometimes I’ll pay on my credit card 2-3 times a month! (I do this mostly when I make extra money or sell some stuff.)

Another note on opening cards- I try to open new cards like Old Navy, JCPenny, Amazon, etc. when I’m making a big purchase. A lot of places have coupons for $75+ and you usually get the best discounts when opening cards. This way you’re not merely saving $10 on a few shirts or a cube organizer, but hundreds (hopefully) on a big[ger] purchase. For instance, when my daughter or I need new clothes is the best time to open a new card or when I needed to buy a winter coat –granted the coat was on sale and I was able to use a coupon, getting that extra percentage off on top of everything really knocks down the price of a big ticket item or a bulk purchase. Let’s just say I opened a Kohl’s card when my daughter and I went summer clothes shopping.

This is what I know and this is what I’ve learned. After going through all of this I went from a credit score of 520 to a whopping 700! If you can’t get approved for a credit card because your credit “is so bad” start with a prepaid card and use it until you built up the credit. Keep those limits low, budget and payment plan big purchases, and pay early, often, and over what’s required! Good luck! Email me for any questions I might be able to help you with! S-hoover@wiu.edu.