- At the beginning of the year, I had a credit score of 568 out of 850, a score lenders would consider to be bad, and which wouldn’t secure me favorable rates.
- To increase my score, I started by figuring out exactly how much credit card debt I had and where, and created myself a digital budget using a spreadsheet.
- Then, I checked my credit score, fixed an error, decided beforehand how I’d divvy up my monthly paychecks, reined in the spending, increased my credit card payments, and took on a side hustle to make more money to put toward my debt.
- Now, my score is 702, and I plan to keep building it even more.
- Read more personal finance coverage.
Less than a year ago, I was overweight and unmotivated, with a credit score of 568 – which Credit Karma, VantageScore, and FICO all rate as “bad.” I had reached “my bottom” and aggressively changed things – not only have I lost 30 pounds, but I’ve raised my credit score 134 points to 702, which is means my credit score is now considered “good.”
I’m not entirely sure if the two major changes were correlated or not, but they both certainly improved my life in ways that felt impossible beforehand. The process of raising my credit score well over 100 points can be narrowed down to seven steps:
1. I did a self-audit
In January, the first thing I did was examine my credit cards, auto loan, grad school loan, and various personal debts. Here’s what my credit card debt looked like at the beginning of the year:
- PNC Core: $6,323.57 – 4% APR
- American Express: $4,520 – 21.49% APR
- Bank of America: $3,012.58 – 22.74% APR
- Chase Slate: $1,817.47 – 24.74% APR
- Best Buy: $1,580.76 – 26.99% APR
- PayPal MasterCard: $696 – 28.74% APR
- Macy’s: $392.83 – 27.49% APR
- Target RED Card: $244.51 – 24.9% APR
- Victoria’s Secret: $41.21 – 26.99% APR
All together, that came out to $18,628.93 (down from my one-time high of about $23,000).
- PNC Core – $4,604 ($1,719.57 less)
- American Express – $228 ($4,292 less)
- Bank of America – $2,671 ($341.58 less)
- Chase Slate – $1,524.60 ($292.87 less)
- Best Buy – $1,311 ($269.76 less)
- PayPal MasterCard – $0($696 less)
- Macy’s – $0 ($392.83 less)
- Target RED Card – $0 ($244.51 less)
- Victoria’s Secret – $63 ($21.79 more)
My new total credit card total is $10,401.60 – I paid off $8,227.33 in 10 months.
As for my car loan, I paid it off in May 2019. (When I checked in December, my Honda Civic had $1,582 left of my $16,000 auto loan. Thanks to my monthly payments of $259.26, I was able to pay that off in about six months.)
The majority of my debt is wrapped up in grad school loans. At the beginning of the year, the balance was $32,304.84, and currently, the total is $31,918.58, or just $386.26 less.
Thanks to my massive self-audit, I discovered that I was $52,515.77 in debt between my credit cards, school, and auto loan.
2. I created a digital budget
Next, my fiancé helped me put everything into Google Sheets: all my credit card balances, monthly bills, and upcoming expenses. He created formulas that showed how much money I had left over each month after paying my bills.
This was a game-changer for me. Having everything in one digital place made it easy to adjust my fluctuating expenses each month (if say, I chose a different amount to pay towards my various credit cards). It also gave me immediate accountability since Johnny knew my goals, debts, and expenses.
3. I checked my credit score
When I checked my credit score on January 10, it was 568. Ten months later, it rose 134 points to 702. Half of those points came from the most surprising thing of all:
I was casually perusing my Credit Karma app one night in May when I noticed that I had a $12,000 balance under a Discover account. This freaked me out because I closed my Discover account more than a decade ago.
A Discover operator told me that I was an authorized user on a family member’s account. They immediately removed me and the next day, my credit score went up 50 points!
4. I take payday very seriously
My company pays its employees once a month. As soon as I get paid, I do the following religiously:
- I pay $1,200 towards my credit cards – I pay the most on my higher balances. (Before, when paying the minimum balance, interest quickly ate up my progress.)
- I strategize how much I pay towards each card; here’s what I paid in October:
- $772 towards American Express (21.49% APR) – which used to be one of my largest balances.
- $173 towards PNC Core (4% APR). The only reason I don’t pay more towards the $4,604 balance is that it has such a low interest rate.
- $90 towards Bank of America (22.74%)
- $60 towards Chase Slate (24.74%)
- $55 towards Best Buy (26.99%)
- I pay more than the minimum (even if only by a few dollars).
- I check Credit Karma at least once a month because it keeps me on track and helps me identify red flags.
- I update my credit card balances in Google Sheets, which always motivates me to keep paying off my debt.
5. I stopped getting more into debt
Even when I paid off several credit cards (Target, Macy’s, and PayPal), I kept my account active to show lenders that I can be responsible with my credit by only utilizing a small percentage of my overall credit limits.
6. I increased the size of my credit card payments
In 2018, I earmarked $300 each month for my credit card debt. I increased that to $915 in February, then $1,200 in June (after my car loan was paid off).
7. I started a side gig
Saving $1,200 a month for credit card debt isn’t easy, especially when planning a wedding. Taking on freelance writing has helped me bring in an extra $200 to $1,200 each month.
I want to buy a house in a few years, but with a “bad” credit score, that would have been difficult. Thanks to the above seven steps, my credit score has been improving like crazy. Hopefully, I’ll be much closer to a score of 850 in another year.