These days I say my credit score with pride but I remain humble because less than 16 months ago I had no credit and didn't truly know what it was. This time last year my credit debt was building up. The truth is that I got a taste of the addiction lifestyle of living on credit. I was 5 credits in and it still didn't seem like enough. Then like an Angel my high school teacher Ms.Daley paid for my first financial class. Every Sunday I went to the one of a class at a church on top of a hill in Bel Air. By the 4th class I was convinced to cut and close every card I had and started my financial education of getting my hands on everything that taught me about how to rebuild credit score.
HOW I PAYED OFF 3/5 credits so far. Debt snow ball.
Line up all your credits from smallest to largest.. Put all the extra $ you made towards lowest until you pay it off. When you pay off lowest then use that old minimum and add the money that would be used to pay the credit to the next lowest credit.
All the mistakes I have made, have turned into lessons learned.
*im not financial expert but I am a sponge and I'm learning everything I can about financials. Don't take my word study and learn about credit yourself but here are my tips.
•ALWAYS pay the minimum on time.. But If you can pay more than the minimum, pay more. Creditors make $ off of interest, the longer you take to payoff balance the more interest you will pay on the money..
I was paying 19% interest so that means for every $100 dollars I was paying 19 dollars just to borrow it.
•Don't use more than 30-50% of the credit limit. Example if the creditor gives you $100 don't spend more than $30-$50 of the 100.
•Don't open to many credits at a time and don't allow businesses to run your credit score.
-If I could do it all over again knowing what I know now.. below is what I would do (This is also what I will recommend to my little sister if she asks how to build her score or to anyone who has no credit at all.)
1. First thing I would focus on learning to manage my own money. I came into a problem using credit because I didn't fully grasp how to manage my own money.. So borrowing more money made it worst.
2. Save enough to get a secured credit card. What a secured credit card allows you to do is to build your credit with your own money. It is not a debit card but a secured credit, the difference is the secured allows you to build you credit score.
3. Then when I learned how to manage and budget my own money and use my secured credit well I would apply for a credit card.. Either use it for expenses such as gas or emergencies and pay the amount back each month. Or I would only use the borrowed credit to build assets that bring money back into my accounts and not liabilities, things that depreciate in value after you buy them. In the words of Tom G "invest in something." Use the credit to invest into yourself by getting a new skill or education something that will benefit you and your family.
SN: the reason the average person gets into debt is because they have no financial education and because they buy things they don't need. I will recommend to anyone who doesn't want to make the same mistakes I made to get a few books and watch a few videos on what a credit score is compile of and learn to use it to your advantage.
