If your credit score is in trouble, you shouldn’t panic. For the time being, there’s no denying that it can be difficult to overcome the poor standing, but this doesn’t mean you’re doomed for all time. Rather, there are plenty of ways to improve your credit score. In fact, we’ve found several examples from the internet when individuals drastically turned around their credit score due to a bit of focus and game planning.
If you’re in financial trouble, take a look at some of the success stories for inspiration. While you may be forced to pursue a bad credit car loan for the time being, you’ll be to purchase a vehicle like a financially-stable consumer in no time…
This first story comes from Brian Hays, a business-owner from Texas. While many individuals tend to get into financial problems due to shortsighted purchases, Hays’ spending wasn’t all that extravagant. Rather, as you’re about to learn, the individual simply forgot about the payments that were hanging around on his credit card (via LearnVest com):
“Back in 2010, I was a pretty busy guy…I was an industrial technology and applied engineering major at the University of Texas at Tyler, and I had just started a new job as the operations administrator at a big-box retailer.
In the shuffle I made a major blunder—one that carried some big consequences when it came to my FICO score: I’d charged some Christmas presents on my credit card but forgot to make payments totaling about $1,000 for four months straight.
The Aha! Moment I didn’t realize how badly my credit was affected until I was trying to buy a car in 2012, and learned that my score had plummeted to 550. I was astonished and had to forgo the loan because it would have been too costly to repay and required a cosigner.
The first step was to create a budget that scaled back on non-necessities, such as eating out. We then used any money that we freed up to pay off our debt—often contributing more than double the minimum payments each month.
On a regular basis, Tara and I scheduled check-ins to run the numbers—and encourage each other. It felt good to be accountable, and it increased our discipline by keeping our goals top of mind.
We also tapped into our competitive spirits by downloading the Credit Karma app, which allowed us to track and compare our scores. It was helpful to see how our digits improved as we eliminated more debt, and motivated us to rejigger our budgets whenever possible to make even more progress.
As a way to reestablish a positive payment history, we also opened a secured credit card, putting down $200 as collateral, and paying off the balance each month.
It was a long journey, but finally, in 2014 my FICO score reached 760. I was ecstatic!”
Fortunately, Hays didn’t lie back and embrace his financial difficulties…rather, he decided to do something about it! Formulating a budget is always a good idea, but it’s especially useful if you’re looking to improve your credit. Hays was able to see where his money was going each month, and it allowed him to focus in on improving his credit score.
The next story comes from Melissa Chinwah, who had countless collections to her name (as well as a repossession). Naturally, her credit was in complete disarray, but she ultimately focused on slowly improving her score over time (as told by Cynthia Drake of CreditCards.com):
“After getting divorced, Chinwah, an office manager, was shocked to find that her credit score had sunk to an average of 348, with the lowest reported score among the three bureaus at just 316. There were 43 collections and a repossessed car on her report.
“Melissa started researching the ins and outs of her credit report on the forums at MyFICO.com, where people shared their tips for raising their credit scores. For example, she learned that being 120 days late on a payment is basically the same as being repossessed, according to a credit bureau.”
What was the difference here? Chinwah simply had a better understanding of how credit works, and she was able to learn from all previous mistakes. This individual was admittedly a bit ignorant when it came to her score being so low (how do you miss 40-plus collection notices?), but she learned a valuable lesson that we can all adhere to: understanding how credit scores work is one of the major ways you can look to improve your overall standing. It worked for Chinwah… her credit ended up climbing nearly 400 points!
Finally, this last example comes from Crystal Groves, a writer for MoneyDrain.net. Groves first realized her financial issues when she was unable to purchase a car. Similar to our first example, this individual began devising a budget, which ultimately played a huge role in her turnaround:
“In my personal finance workshops that I teach, the first step I always encourage is for people to simply start keeping track of their accounts. I tell them I don’t care how it is done, excel spreadsheet, MS Money (my choice), Mint.com, just some way for YOU to track what goes in and comes out of your accounts.
This was my next big eye-opener, you know after realizing I couldn’t buy a freakin car. Seeing exactly what amount of money I was wasting each month because I was actually keeping track now.
One of the reasons I like using MS Money is it will let me review monthly reports automatically. I can pull up nifty pie charts on how much money I spend on food, utilities, etc. So I know where the big coin suckers are. What I didn’t realize, was that over the last 2 years I had spent $3,000 on Schwans Food Delivery service, which was totally an unnecessary expense, but I hadn’t realized just how much I was wasting on it. And I wouldn’t have if I didn’t actually start keeping track and seeing where everything added up.
So I started reducing the extra expenses. Don’t need em, I’d rather have the money now that I know how much I could be saving. Have you ever totaled up how much you are spending on fast food, cigarettes, or Starbucks? I betcha it’ll be an eye-opener too!
I actually started making a game out of how much money I could save and how much I could reduce expenses. I started doing $0 days, wherein 2009-2010 I didn’t spend ANY money on 201 out of 365 days.
I did another year experiment where I kept track of how much money I saved through coupons and discounts and realized I saved over $2,300 JUST by taking a few moments to be a conscious shopper.”
As compared to our initial example, the difference here is that a budget helped Groves understand where she was wasting money. Some individuals may assume that they’re financially strapped, and they focus on making more money instead of improving their credit. However, these individuals fail to realize how much money they’re wasting each month. If you have more money at your disposal, you can better complete your payments in a timely manner… and this will ultimately help those who are struggling with a poor credit score.
