How to Fix Your Credit and Prepare for Financial Crisis

When I was in college I decided to open a credit card. I reasoned I could put my books on it and use it for "emergencies." The holiday season came and I decided to head to the pricey mall by my school. I bought a gift card for a friend, presents for my family and some language books for me. I started to charge everything and buy things I couldn't afford. I made only the minimum payments and lost my job. I stopped making payments all together. My card went into collections and then into the dreaded charge off status. I kept opening cards and one by one those were charged off too. If I could give my younger self  advice it would be "Don't buy that make those payments and pay those cards off." My bad credit followed me throughout my life. Nowadays, credit is required for everything including apartments and jobs. 

Monitor your credit report

Did you know that you are entitled to your annual credit report for free from the three major agencies? Get yours here. Check for incorrect info and verify the debts listed are yours. Monitoring your credit score can help prevent identity theft. According to Transunion in 2016, 399,225 people had their identity stolen. If you are applying for new accounts limit the number of hard inquiries. Too many hard inquiries in a short amount of time will hurt your score especially if you aren't approved. I made the mistake of applying for too many accounts and my score took a dip. The good thing about inquiries is they only stay on your report for two years.  Also, if you have a credit card and want to ask for a credit limit increase check if it will be hard or soft inquiry. 

Apply for the secured card

I applied for a Citi Secured Card. My husband thought I was crazy for depositing money to open up a credit card. I found that after opening this account other credit cards were easier to obtain.  It also helped me build my credit. If you are a current Citi customer you can link your accounts and pay your balance within the app. I was recently informed that my secured card was converted to a Citi Diamond Preferred Mastercard. The best part? I was returned my initial deposit of $200.00. This is amazing considering I had no idea I was entitled to this refund. According to Credit Karma, Capital One Secured Mastercard and Citi Secured Mastercard are two of the best secured cards. Citi Diamond Preferred is an amazing card that offers CitiPass and just recently they extended an offer to earn 5% back on purchases! 

Apply for a store card

Do you like to shop as DSW,  Gap etc.? Apply for a store card at your favorite store. Only buy what you can afford. Most importantly, buy what you will wear and love. Do not buy things because they are on sale. Also, pay your balances off in full if you can since store cards tend to have higher APR's. A recent blog I read stated a store card's APR is usually upwards of 22.99%. Or if you must pay eighty percent off. Do not carry a balance and do not make just the minimum payments. Store cards do not have an introductory APR. This goes for regular credit cards the biggest misconception I hear is carrying debt is good. It is not ! When you pay your balance off in full the card company cannot charge you interest. Secondly, you are considered for credit limit increases. 

Pay your debts off

Start with the smallest debt. From there categorize your debts from smallest to largest. Also, pay off any store cards that you don't use as often and close them. Store cards usually have the highest APR's. Additionally, your shopping taste might have changed. For example, I used to love shopping at Old Navy. So opening a card there would have made sense. Today, I rarely shop there so opening a Old Navy credit card wouldn't make sense. Macy's is more of my style. I opened a Walmart credit card because I shop there often and I buy what I need. Have a debt older than seven years? The collection agency has no legal standing to keep collecting on this debt

Save Money $$$

Did you know that according to a 2017 Bankrate survey, 60 percent of Americans don't have $1,000 to tap for unforeseen expenses? I know it may seem daunting but even have an extra $100-200 is key as well.  This week my printer broke and if my husband and I didn't have extra funds in our savings this would have been detrimental. Thankfully with our savings we were able to buy a new one. I know saving can difficult but it will be comforting to have that extra cushion for that just in case moment.  Even a extra $40 you save a week can help. You could also use the money saved to negotiate with the credit agency to settle your debts for less. Since I had some extra money on hand. I called up the collection agency and offered them a lump sum instead of paying in down in small amounts. This saved me money! I was able to negotiate paying $500 on a debt instead of the entire $700.

Change your Mentality 

One of the worst things you can do is spend money you don't have. I highlighted my experience above. Do not spend if you cannot pay it back within a reasonable amount of time. 

Today, my score is above 650. I recently applied for a Chase Slate card. I got the dreaded we need more information before processing your application. They called while I was at work. I called them back and the woman was super polite. I was on the phone thinking what if I don't get approved? She said congratulations you have been approved. When she told me my limit I couldn't believe it!  My husband who always had above 700 even commented that he never had a card with such a high limit. It feels great to get back on track. I was walking home yesterday and thought how broke I used to be. I may not be rich but I am comfortable. 

Beltkiss Sanborn 


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