In 2015, I purchased my first home with no sweat. It was over $200K and a brand new development. We were the first owners to step inside in it. I remember seeing the house and we knew we wanted it at first sight. It was a two-story home with 3 bedrooms and 2.5 bathrooms. Boasting sparkling hardwood floors, spacious open floor plan, granite kitchen counters with the newest appliances, and a master bedroom closet bigger than the room I was raised in. It was perfect! Now the next thing to do is to put my name on it. The really amazing part, I had no idea about the process or what it took to even get the home. I knew nothing of credit score or how it worked, debt-to-income (DTI), or interest rates. What I did know is we wanted it and wasn't taking "NO" for an answer.
To the bank we went, ignorant to the whole process. We walked in to let the loan officer know, "We want to buy a house!" She cordially begins to ask for my SSN & more personal information to pull my credit information. I obliged, of course. She chit chats more nervously as the information is taking it's sweet time to pull up. It finally does, at that time, she informs me my credit score was around 740. Once she told me, I'm still thinking, "Oook?! So is that good or bad? Will we be able to get this house or nah?" She assured that was nothing I had to remotely worry about. She then went in detail about the benefits of being First time home buyers, veterans, and receiving the lowest interest rate at about 3%. All this sounded foreign to me cause all I was worried about was getting the house. It was a sight to see how the employees of the bank smiled and waited hand and foot when they seen my credit score. They were no longer lackadaisical but very excited to be of assistance. These were all signs that this credit score thing actually had enormous power that I've never known. Long story short, we got the house with the least effort possible. A brand new home with all the bells and whistle with a fixed rate of 3.2, one of the lowest interest rates in home buying history. But what did it all mean? I soon would find out from an unexpected source, but first, let me give a little background.
We moved into our home in March of 2015. Funny, I had recently quit my old job and was transitioning into another. Quick rundown, the oilfield is a unique career field. The boom or bust is mostly dependent upon the market prices and politics. It's a seesaw effect with the highest highs & the lowest of lows. You could get over 50 hours of overtime one week and the next, fighting to break 40 hours for the week. It could be nerve wrecking to the average person that doesn't plan for the unexpected changes in this industry. Despite the constant uncertainty of knowing when this joyride could come to a screeching halt, I loved it. The downturns in the market allowed me time to actually enjoy the money acquired from working so many hours. When the "getting's good", on average, I would work over 100 hours per week. Not hard work but it is time consuming, if nothing else. During those times, I would pay bills, and save as much as possible to proactively create a cushion from the unpredictable market. Therefore when the inevitable eventually happened, I wouldn't panic wondering where's the next meal coming from? It worked like a charm. Saving money worked so well that is was shortly put to the test. That next month, my company, at the time, was hit by the effects of low oil prices. I had just bought the house a month prior so to be temporarily laid off due to declining work was definitely not in my plans but I was prepared.
About 2 weeks into being out of work, a co-owner from my company called to ensure I would be able to last through the slow spell. The reason he asked, many other employees would quit and run to another job for two reasons: 1) They live check to check and couldn't afford to miss being paid for longer than a month. 2) They can find another job, even in a downturn market, with equal or better pay. The oilfield is very competitive like that. So it was in an owner's best interest to check to see if a "good" employee would stick around until this thing blows over. I made him fully aware that I was good for a couple of months, if need be. As long as it was still a job available, I would be there. Plus I knew it wouldn't be more than 2 months of no work. With that feedback, the owner gathered that I was fairly good with managing money, simply, because I didn't sound worried or filled with gripes & complaints. Next, he wanted to know did I have a credit card. I told him, "No, because I'd seen people get into huge debt for years behind credit cards so I avoided them like the Plague". He understood, but enlightened me that credit cards weren't a bad thing at all, presuming you use them correctly. He spent the next 2 hours explaining the importance and POWER of credit cards when it comes to credit score. In fact, credit cards are the fastest and surest way to build good credit. Hence the name, CREDIT card. He went on about the PROs of credit cards. Most cards have 24 hour credit reporting/monitoring, fraud protection, rewards points, flyer miles, discounts, and, my personal favorite, CASH BACK! He happily told me about a card I should consider getting, which later end up being my first major credit card. It's was the Capitol One, QuickSilver card, that gives 1.5% cash back every time you swipe it. He said, he uses the card, the most, during the year then pay off his taxes with the cash back from the credit card. This blew my mind! My mouth dropped. So, let me get this straight, this card will increase my credit score AND give me actual cash back that can be used to pay the bill, put in my bank account, or pay taxes too, just for using the card?! My next question, "Where Do I Sign?" My wheels were turning at the limitless possibilities of knowing how to increase my credit score.
As all of this information was being processed, while still actively listening, everything started to make sense. My credit score is the reason buying our first home was such a breeze. It wasn't the only thing that played a part, of course, but it was surely a defining factor. Now realizing the power of a 740 credit score, I wondered how I got there? Well, when I think about it, I never had bad credit. I was so terrified of being in bondage to any type of debt that I never wanted to touch a credit card. But, I did buy my Mama a stove. It was one of the first things I bought her when I went into the military. First and biggest purchase, at that time, I ever made that would require payments. It was like $1500, give or take. I set up an automatic allotment for the stove's payments. Minimum payment was $70. I paid $150. Mind you, I don't know or care about the interest rate. All I know is I won't miss a payment because I be damned if I allow the furniture store to repossess my Mama's stove! That I bought?! No way, Jose! I paid that stove off within a year with paying minimum interest. The payments were so automatic that I didn't notice the stove was paid off. They eventually sent a refund check for overpayment. I blessed my Mama with that too. Love you Ma! Funny how my ignorance & fear of debt back then, led to having good credit in the years to come. So that was my introduction to starting good credit. I did the same exact thing when I bought my first, second, and third car. I went to the bank to get a personal loan, they gave it to me with ease because of my credit. I always paid, at least, $100 more than the minimum payment. All the cars were paid off early which helped boost my credit even more. Ironically, the fear of repossession of my Mom's stove is what led me to having a great habit of paying bills on time, every time. That great habit made getting a loan from banks so easy because my relationship with lenders were always in good standing. The paperwork, or credit score, showed the pattern of on time payments and early pay offs. They had no choice but to give me what I asked for. I knew that now! I could apply it now! Most importantly, SHARE it..... NOW!
In my conclusion, I can't tell you how to fix or repair credit. I never had bad credit. I didn't know what credit was, what it meant, nor how it work. I feared it mostly. I seen how debt could take a toll on good people that make not so good decisions, simply, because they just didn't know. Debt can end marriages prematurely, force you to rob Peter to pay Paul, & create a world of drowning misery. Seeing it first hand, I never wanted that for me or anyone around me. I have a good habit of learning from others' mistakes. I may not have learn what to do but I learned what NOT to do. One of those things was not buying anything I can't afford. If I can't pay something off in less than 2 years, I won't even consider it. If I do purchase something on credit, I set up automatic payments & forget about it. Always pay more than the minimum payment on a loan or any money owed. This will reduce the interest you pay. Use credit cards WISELY. A credit card should be used no different than a debit card. If the funds in your bank account can't cover the amount you plan to spend on the credit card, DON'T SWIPE THAT CREDIT CARD! Cause that's NOT YOUR MONEY! Control your spending and pay the bills you create. Understanding that concept will put your credit score in a much better perspective. Lastly, SAVE! SAVE! SAVE! Then...... you guessed it! SAVE some more. Saving is imperative to soften the blows of the unexpected turns in Life. Life happens! I know, but that doesn't mean you can't be proactive. Saving money gives empowerment to more options despite the lack of opportunity. Instead, of jumping ship from job to job, I relaxed because I could stand to miss a few checks without missing a few meals. That is the point of savings. When the "worse" happens you are somewhat prepared, as I was in 2015. I could tell you another story about that same company going bankrupt & I didn't work for the entire year of 2016. Not because I had to but because I had the option to just chill. I'll save that story for a later date. But I was well prepared for that, to say the least. All in all, these are easy steps that I used to reach an EXCELLENT credit score rating. I currently sit at a 814 FICO credit score. My wife is also in the 800s. My parents and in-laws are in the mid 700s credit score range & steady rising, as I type. This is directly connected with the information I learned and SHARED with them. So from their results, I know it works! It's been tested, stamped, and approved. Today, I decided to share it with you, in hopes, you learn and apply the same. This article only scratches the surface. It's a kick start on your road to financial freedom & empowerment through using the credit system to your advantage. This is merely a blueprint, you must do the rest. Remember, that Google's your friend. Research for the information you need. Seek and you shall find. Or just simply ask. The information is out here and mostly FREE. Remember, Ignorance is not a good enough excuse to shield you from undesirable consequences of not knowing. The system still works regardless if you know or understand it or not. Don't allow the system to beat you from lack of understanding. Learn the system and leverage it in your favor. The wealthy do it all the time. So can you! Just as I did! They say, "Knowledge is Power". But, I believe the application of knowledge is Power. All this available information means nothing if it's never applied. So go SEEK, FIND, and apply. Like my friend, Trav, always say, "Don't Complain, Adjust!" Can't wait to see you in the 800 club. Til then I send you BLESSINGS!!! 3x's!
- Pulitzer Pap