Joshes and Joshettes, it's Tuesday and I felt like writing a post. There's only on problem what do I talk about on Tuesdays? I honestly don't know but today will be a Truthful Tuesday post. In this post, I will be going over my history with credit cards and credit score. Here's is my personal credit story.
I received my first credit card at the age of sixteen, it was a Chase card. My father opened the credit card for me to use in case of emergency. Since I never paid the bill I made sure not to purchase anything on it for myself (gas was in a gray area). The limit on that card was a modest four hundred dollars. When I was eighteen, I went to an expo at the Javits Center with my father and his friend. The top floor of the center contained a bunch of vendors and a booth for Capital One. Even though I thought I would get declined, I decided to sign up for a card anyway. To my surprise, I was approved with a credit limit of a thousand dollars. This was my first experience having my own credit card.
At the time I was working at a big chain electronics store and my new credit card was burning a hole in my pocket. The first thing I purchased was a new sound system for my car. I'm talking about a new radio, two twelve-inch subwoofers, two front speakers and two rear speakers for the grand total of seven hundred dollars. After making a small payment of around thirty dollars, I bought myself a Microsoft Zune (an alternative to the iPod) and maxed out my card. I didn't understand interest and only paid the minimum with no intention of paying off the balance. After leaving that job, I started working for a new company. After receiving my first paycheck I decided to celebrate by driving to Long Island and visiting Best Buy. My old job had denied my credit card application so I decided to apply to Best Buy. Somehow they approved me for both the master card and the store card. My limit on the master card was six hundred and on the store card, it was fifteen hundred dollars. Since they allowed me to shop without having the physical card I purchased a brand new television, a PS3, an extra controller, Call of Duty World at War and a laptop for my sister. Man, younger me had a shopping problem. I actually paid that card off because I wanted to buy more stuff from Best Buy and loved their financing options.
Let's fast forward to a year later, I was down to two credit cards. The Best Buy master card had closed itself because I never used it. The regular store card had no balance and I owed about eight hundred dollars on my Capital One card. I wanted to take a vacation and an ATM pushed me over the edge. One day while on break, I went to take out money at Chase. The ATM said I was pre-approved for a card with a six thousand dollar limit. I immediately called Capital One to see if they would give me an increase. They new my spending habits and I often went over my limit so they offered me an increase of three hundred dollars. I did the sensible thing and I hung up the phone and opened up a Chase card. After receiving the card in the mail, I booked a two-week vacation in Hawaii for eighteen hundred dollars and did a balance transfer from my other card. Since I was going on vacation I need to purchase a new Blackberry Tour but my upgrade was four days after I landed. So instead of waiting, I purchased the phone at full price ($650 for a blackberry). In Hawaii, I bought paintball guns, airsoft guns, clothes and even a new suitcase. I spent soo much that when I returned to NYC, my card was maxed out. My only lines of credit without a balance were my Best Buy Store card and my Bill Me Later account (precursor to PayPal credit).
Let's fast forward to a year later, I still had the same three accounts but that wasn't enough. I wanted the pinnacle of credit cards, an American Express card. I remember it as if it was yesterday, I was standing outside of a grocery store talking to my father as I applied. Once again I was approved but I went for the gold card as opposed to the blue. The gold card is a charge card which meant at the end of each cycle the balance had to be paid in full. This was a first for me because my Chase card was still maxed out (I would pay it down a bit then spend on it). At this point in my life, my credit score was 750. For the first time in my life, I didn't purchase anything crazy and just used it to buy normal things such as my metro card. Later on that year, I became involved in a network marketing company. The leaders of my team suggested that I apply for the network marketing credit card and I complied. Twenty-five hundred dollar limit and I used that card cover the expenses from that company plus a seven hundred dollar phone bill from Verizon. Everything was fine until I lost my job at the end of 2012.
For some reason, I thought it was a smart idea to buy a brand new DSLR when I had no job. To make matters worse I put it on my American Express card. The authorized user on my account also used their card to pay their impound fees on their motorcycle. This happened at the same exact time and the bill was over seven thousand dollars. I could cover the camera but not the minimum payment to qualify for the pay over time benefit. So for the first time, I made late payments on that card. That lasted for four months. Other than that the network marketing company has increased my limit to forty-five hundred and that was maxed out. Midway through 2013, I started working again and I received a credit increase from PayPal to eight hundred dollars. Once again I went shopping with it. During this period I was working eighty hours a week and getting paid decent money and eventually I was working over a hundred hours. I had money to pay off all my debt but I was spending close to five hundred dollars a week on phone games and at the casino. I needed financial knowledge badly and I would receive it in the year 2015.
In the year 2015, I had my Best Buy card and the network marketing card closed for non-payment. I co-signed for a car that was repossessed for non-payment. The car was auctioned off for a loss that was a little more than ten thousand dollars. My Chase card was still maxed out and so was my PayPal credit. My American Express card had a zero balance but that was my only saving grace. Because my bank account never had more than three dollars in savings and always less than a hundred in my checking. If you added up all my debt it amounted to around twenty-five thousand dollars. My credit score was now 408. The thing that changed everything for me was a book called The Total Money Makeover by Dave Ramsey. I followed Dave's plan and saved up a thousand dollars (as an emergency fund) before tackling my debt. Because of my poor spending habits saving the thousand dollars took me around half a year. After paying off my PayPal balance, I began working on my Chase card. The debt was nearly seven years old and I was tired of seeing it, so I closed the account and started throwing money at it. In one year, I was able to pay off the entire balance. A couple of months after that I received a summons from the card that I opened up for the network marketing company. The interest had brought the balance close to seven thousand dollars but I was able to settle for less. The payment was only fifty a month which was manageable especially since I wasn't working.
So now came the hard part, rebuilding my credit. Since no one would approve me for a credit card or phone line, I started using my tax ID. The only bank that approved me was my old friend Capital One. They gave me a business spark rewards card with a limit of five hundred dollars. Because I was now financially literate, I never held a balance and I would use the card as if it were a debit card. The card also offered 1% cash back on all purchases so I made in my goal to reach a hundred dollars in cash back in a year. Two weeks before the year was up, I had earned the hundred dollars. I had spent ten thousand dollars on a card with a five hundred dollar limit, yet I held no balance. During the same period, my authorized user and I had managed to do the same on my American Express card. My credit score after all of this had gone up to around 565. Not great but a start and American Express took notice and offered me an upgrade to the platinum card which I accepted. After another year of holding zero balance and paying down my judgment, my score is now 681 (at the time of writing this post). I still only have the platinum card which has no limit, my Capital One card which now sports a nine hundred dollar limit and a PayPal credit limit of eleven hundred dollars. I owe two hundred dollars for my judgment and would have paid it off last year if not for my injury. It was hard work fixing my credit but I needed to do it in order to reach my goal. I want to invest in real estate and credit is essential for lower interest rates. It's also nice knowing you owe no one.
The reason I wrote this post wasn't to brag but to share my story. I want everyone to learn from my mistakes and I made a bunch of them. This post also serves as a motivational post, if I could work my way out of debt so can you. I am also blessed in knowing my story and Dave Ramsey's book assisted one of my friends in their journey. Feel free to pick up the book or listen to Dave's podcast. I am not sponsored by Dave or even making money by writing this post. But I am making money by using my cards. The journey is long and hard but you will get through it.