How I Improved my Credit Score by 150 Points in a Year: A 13 Point Process.

At the beginning of 2016 I made a New Year’s Resolution to improve my credit score by 150 points. By one metric it started at 561 and ended at 721. How did I do it? First, I will give you a little backstory for context. In the Fall of 2015 my wife and I decided that we wanted to move. We had 4 pets, the two of us and our daughter in a two bedroom condominium. We also wanted to have my mother-in-law (ugh) move in with us into an in-law suite of some fashion. She is disabled and it would make our lives easier and eliminate some of the redundant monthly expenses we both have. We found a great house that actually had a separate mother-in-law cottage house. We went to get pre-approved from my cousin Steve’s mortgage brokerage: Keegan Mortgage. We did not get approved. Not only did we not get the pre-approval, but the score was embarrassingly low; like hobo with a crack problem low. I had the misfortune of being financially illiterate and being really good at accumulating debt. I had to improve my credit score by 150 points if I wanted to buy a house the next year.

crack head
Had a higher credit score than me.

At this point I was well aware of the evils of debt thanks to Dave Ramsey. Credit score is a mechanism that takes advantage of indebtedness. Not only are they aiding the credit lending companies, but they are also trying to sell you products. They are not government agencies. This confuses some people since they are known as credit bureaus. They are full-fledged for-profit companies and some are publicly traded. The three credit bureaus are: Equifax, Transunion, and Experian.

Unfortunately I am not far along enough into my debt snowball to be able to afford a house without obtaining a mortgage;, so for now, I had to play the credit score game.

Steps I took

Before you even start in order to improve your credit score by 150 points in a year you have to have a really really sh#tty credit score to start. If you are at 675, the next points are still valid, just don’t expect quite the same effect. It’s the same idea in losing weight: the fatter you are the more fat you have to lose.

  1.  Get a credit report. It’s free to get one once a year. Annual Credit Report . This is fairly straightforward. Print it out so you can mark it up. This copy means more than what a site will say. General sites may have some information, but treat the full copy like Gospel. If you have a spouse, do this for both of you.
  2. Figure out what is hurting you on your credit report. This is broken into three basic possibilities: late payments, credit-to-debt ratio, collections. Other factors do affect your score such as credit inquiries. For that reason…
  3. Stop applying for credit! This should be obvious, but it is less practiced. If your credit sucks and you apply for credit you are further hurting your already bad score dipping you further down and you are going to get a crappy interest rate for your troubles. This makes it even harder for you to…
  4. Be on a strict budget. You can’t pay off collections or pay down debt without having a surplus. To get a surplus you need to have more coming in than going out. We finally got on track by using the envelope system.
  5. Once you are on a budget you should set all your bills to be paid automatically. There isn’t a reason to not do this once you are on a budget. Those bills need to be paid; on time or else you will continually hurt your credit score. Set it and forget it also has the added bonus of freeing up some time and mental space. You have less to do and less to remember. Make sure that when you set them up for auto-pay that the first month is actually paid. Often bills require a whole cycle to go through before the auto-pay picks up. You may have to make a manual payment that first month after you are set up.
  6. Have a payment plan. Identify which collections you have and how and when you plan on paying them off. You will create a type of debt snowball specifically for your collections.
  7. Contact the Creditors within a month out of being able to pay them. Send a letter and sign it. Make sure you research the correct address. If possible target the original creditor first then the collection agency if need be. Here is the sample letter I used. (Note that I did not create this letter and do not know there original source for which to cite credit)                                                                                                     Creditor
    Street Address
    City, State, Zip
    Re: Collection Account # or Social Security#
    Amount $XXXX.XX
    Dear Sir or Madam,I am disputing the validity of the debt referred to above. I am not aware of the account number and you have not informed me of the existence of this account. I am willing to pay this account IN FULL (or a settlement percentage, whichever is feasible) if you agree to immediately delete the account from the credit reporting agencies (namely Equifax, TransUnion and Experian) that you have reported to, and validated this account. My sole purpose is to get this item removed from my file. This letter should not be interpreted as recognition of the debt or acknowledgment of liability for the debt.If you accept the terms of this agreement, the certified amount of $XXXX.XX will be sent to your collection agency provided there is complete deletion of any reference to the debt from my file on all the credit bureaus that you have reported to, and the debt is validated. As the full amount demanded will be paid back, there should not be any waiting period to delete this item from the reporting bureaus. Your agency should delete all information regarding the account from my credit files within 10 business days from the receipt of the payment, as mentioned in this agreement. The terms of this agreement will not be discussed with anyone but the original creditor. No third party will be informed if contacted and no acknowledgment of the debt, any kind of payment, or settlement will be discussed if I am contacted by the Reporting Agencies.Following the acceptance of the agreement, please prepare a letter on your company letter head unambiguously agreeing to the aforementioned terms and conditions and have it signed by your agency’s authorized signatory. This letter will imply a legal contract, enforceable under my state law.If I do not receive an approval letter within 15 days of your receipt of this letter, I will withdraw this offer.Please communicate regarding this account to the address mentioned below:Your Name & Signature
    Your Address
    Your Phone #
    Your Email Address
  8. Follow up the letter with a phone call. Get a human and make sure they understand exactly what your intentions are. Do not admit to owing the debt, but acknowledge your intention of paying it off. There are multiple reasons for this which I will not outline because they are not useful for this discussion.  State that you want to pay for deletion rather than collection paid. This is a huge difference on your report. If they agree, have them send it in writing. I did not have any issues whatsoever with any of my creditors, but having the agreement in writing protects you in case they don’t remove the listing or list as collection paid. Once you have the letter pay them.
  9. credit score increase by 150 pointsBe patient. There is a good deal of waiting involved. This why the article says, “How to Improve your Credit Score by 150 Points in a Year..” instead of, “How to Improve your Credit Score by 150 Points in a few month.” I am highly skeptical of schemes that increase your credit score quickly. There is nothing quick about the process.
  10. Pay off/down your other debts. Getting the collections paid is huge, but you also have to pay off or down your other debts. Choose revolving debt (credit cards) over other debts (student or auto). You don’t need to pay off everything. I still had my wife’s student loans, her car, and our house.
  11. If offered help take it. If you ask for help you better have steps 1-7 done. If not you are almost stealing. If you ask for help and then blow that money because your budget wasn’t in check then you stole that money. If you do take some one’s help you either need to pay them back or pay it forward depending on their expectations.
  12. If you owe a creditor money, don’t dispute it. This is another ethical point. Some people try to find angles in which they can get out of paying a debt they owe. They will cite their state’s credit collection laws, blah blah blah. If you owe money pay it. Principles are more important than a few points on your credit score.

credit scoreConclusion

That’s how I improved my credit score by 150 points in a year. Some people will make points about closing out accounts or not closing accounts. I honestly didn’t think about it. Some other people online will try to learn the finer points of exactly how to manipulate each and every variation of different vantage scores. I don’t have the time for that and I believe there is a certain amount of diminishing returns when it comes to credit score knowledge. What exactly is 800 going to do for you that 750 isn’t? Is your goal really to be that credit worthy? My goal certainly isn’t my goal is to get to a certain level as a tool with which I can; hopefully, never need credit again.

Author: David Matthews

I started this site as a way of discussing what I’ve learned about the relationship between personal finances and physical fitness. What I have learned allowed me to lose 50lbs and improve my credit score 150 points in the same year and become a happier person.

Husband. Father. West Virginia University Grad. Licensed Insurance and Financial Professional. Sports fan (Philadelphia, WVU, and Manchester City). I’m also a huge nerd (like Magic: The Gathering huge)

Published by David Matthews

I started this site as a way of discussing what I've learned about the relationship between personal finances and physical fitness. What I have learned allowed me to lose 50lbs and improve my credit score 150 points in the same year and become a happier person. Husband. Father. West Virginia University Grad. Licensed Insurance and Financial Professional. Sports fan (Philadelphia, WVU, and Manchester City). I'm also a huge nerd (like Magic: The Gathering huge)

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