If you were me three years ago, your credit was shot, gone down the drain and that was that. Trying to obtain a loan, credit card or even department card to save your life was not happening. As, I have talked about finances in Entrepreneurship Forced Me To Become Better At Math, 5 Ways To Create Better Money Habits and more under the money category of the site that my finances have not always been the greatness. However, as I have matured in recent years, one thing I have been working on is re-establishing my credit after of years of bad mistakes.
Understanding Of Money
One of the first steps I truly had to make when re establishing my credit after years of bad mistakes was truly get an understand of money. Money is a tool that so many people misuse it daily. One thing, to note you cannot blame your parents for not teaching you. Once you become an adult you are an adult. My dad always told me “no, credit cards” I got one soon as I could. He taught me to always use cash and live below my means. I chose a different route. On a psychology level money was a way for me to feel better about my life when I was stressed. When I am stressed I shop thinking that purchase would alleviate whatever issues I was having. That was a huge lie that I was living. Going to the root of the issue and getting back to what God says about money really helped me. In addition to that, I read The Richest Man In Babylon which really got me focused.
The rich rule over the poor, and the borrower is servant to the lender. (Proverbs 22:7 NIV)
Good Debt vs Bad Debt
I am not here to lecture a soul on what they do with their money. Instead, I want to be completely transparent of what money has done to my life. I personally believe all my student loan debt is good debt in my book and my consumer debt is bad debt. This is a personal thoughts on good verse bad debt with my situation. There will people who say certain consumer debt is good or having a house is good debt. Seeing that materialistic things did to my credit and more consumer debt is bad. To be honest, I don’t know where half of that must have stuff is right now. Determine, what is worth it when it comes to your debt.
Secure Credit Card
Almost two years ago I got on the Dave Ramsey train of how I should live because I felt it truly aligned with God. However, after months of listening to calls and his messages I realized being a business owner was different than so many callers and followers who were married or had 9 to5. He was saying that I need to quit living this life and go get a real job. Dave’s advice can be far out there at times. I realized during this time that I did need credit if I wanted to do things in life. Yes, cash in king in so many situations but I was not making $300K a year to pay for a house upfront or a car.
For almost another year, I listen to Liz my personal and business banker say I need to get a secure credit card. Finally, after months of not seeing much growth in my credit score after paying off debt and increasing payments on student loans I took the plunge. My secure credit card comes from USAA a company I have been using since I was 16 years. Within six months my credit score went up by 80 points. Furthermore, I finally started receiving pre approved credit card offers to help me re establish my credit after years of bad mistakes. My credit score is far from 815 but it is way better than what it was.
This is a huge factor in re establishing your credit after years of bad mistakes is being responsible with your money. One thing Liz told me to do was find one bill and always put it on the card. She also shared with me never going over my actual limit maybe using half of it and thats it. Then the whole balance is paid off at the end of the billing cycle. That is important to note, don’t just pay it off the next day you need to wait until you receive your bill so the information has been reported to the credit agencies. Since, opening my secure credit card I have two additional credit cards. Yes, I have been approved for others but I have torn them up.
My goal with re establishing my credit is to buy a small fixer up house towards the end of the year that later I can utilize as a rental property that way I can make money in my sleep. My last goal is just to mainly have a true understanding of how I spend my money and why.
Images from The Every Girl