First Person: I Repaired My Credit After Making So-Called Irreparable Mistakes

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I was able to repair my credit history after making so-called irreparable mistakes when I was in my 20s. According to a recent U.S. News and World Report article, building a good credit history is one of the most important things a person can do. I was able to fix my credit history before I purchased my first home. I had to purchase a car with cash while I waited for enough time to pass after I ruined my credit history by making a few common "goofs" outlined in the article.

Closing my accounts

I closed almost all of my credit card accounts after I got out of debt by age 30. The reason I did it was because I was so sick of having debt. I didn't want to be tempted by my gold cards. I wanted to take a pair of scissors to all of them. I got rid of all of my credit cards except one. According to experts, closing credit accounts leaves a person with a reduced amount of available credit.

Running up the balance

When I was in my 20s, I ran up my credit card balances. I actually thought it was a good thing to max out my cards until I had no available credit left. It turns out FICO would like to see low balances on several cards rather than one large balance. Even after I cut up most of my credit cards, I still had one card. When I had unexpected expenses I ran up the one card, which further undermined my credit history.

Applying for too many cards

I remember getting a different credit card offer every day in the mail when I was in college. I felt like I was popular with the credit card companies. After I graduated, I took the many credit card invitations as a sign that they must have thought I was doing pretty well financially. However, the truth was, I was swimming in debt. In order to get out of debt, I had to start ripping up every credit card offer that came my way. When I stopped applying for new cards, my credit score went up.

Ignoring mistakes on my credit report

I was able to rebuild my credit score after becoming more aware of what was going on. I started checking my credit report once a year. The first time I was surprised by all the errors. I had the credit bureaus fix all the inaccuracies. After just a few years, my credit score was back in the good range.

Now my credit score is almost perfect. I still only have one credit card in addition to one that also serves as debit card. I avoid department store and gasoline credit cards. Because of my high credit score, I was able to qualify for a 2.75 percent interest rate when I recently refinanced my house. It definitely paid to clean up my credit history.

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More from this contributor:

Getting out of Credit Card Debt Changed My Life

Escaping the Debt Trap

Dark Side of 401(k) Loans


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