Great Credit, One Day at a Time

rebuilding credit

In 12-step fellowships, participants share their experience, strength and hope with one another by relating what life was like (when things got bad), what happened (the changes they made), and what it’s like now. As part of her recovery, Denise L. of San Diego chose to repair her credit. She shared with us the story of how she did t.

Bad Credit was an Obstacle

Denise L., at age 40, needed to rent an apartment. For past rentals, she was able to do so with a security deposit, first month’s rent and proof of employment. But landlords in California had begun to require credit checks for all applicants, and Denise had bad credit. She had a great job and enough money to move in, but with a score of 590, she still needed a co-signer to secure the lease. “It was embarrassing. Here I was, 40 years old, having to ask a friend to co-sign for my apartment. At that point, I realized that I needed to fix my credit,” Denise says.

“Credit reports and score are much more influential today than they were decades ago,” says Credit Expert John Ulzheimer, formerly of FICO® and Equifax. “Bad credit can be so damaging. You simply never know what important doors will close because of it, until they’ve already been closed.”

Denise’s credit score was low due to a bankruptcy and collection accounts. She also had extreme anxiety on the subject. “Every time I looked at my credit, I was overwhelmed. So I ignored it,” she recalls. “I didn’t understand the whole credit thing and didn’t know how to learn.”

Before Denise and her husband divorced, she relied on him to manage household finances. “While I was married, I didn’t think I needed to worry about it,” she says. They obtained their housing and cars in her husband’s name only.

“Denise made a common mistake when she relied on her husband’s credit without actually rebuilding her own. But how many marriages end up in divorce? Every consumer needs to have and protect their own good credit,” says Ulzheimer.

A Credit Epiphany

Denise got clean and sober right around the time of the fateful apartment hunt. She joined a 12-step program and began working with a sponsor, Mary. A few years in, they decided to tackle the issues of credit and financial responsibility. “It’s part of being a productive member of society,” Denise explains. “I need to be self-sufficient. I want to show my daughters how to handle their money. I have a good job and I pay my bills. I’ve cleaned up the financial wreckage of my past and I deserve to be recognized for that in the form of a good credit score. A score that truly reflects who I am now in recovery.”

Financial amends

Part of a 12-step program is to make amends to those who were hurt by the addict in the past. That includes oneself. “I needed to make amends to myself, and to make right the financial harm I had done to myself in the past,” she says.

Denise confided in her sponsor that she had considered using a paid credit repair service, but was afraid of getting scammed or of wasting money letting someone else do something she could do for herself for free. Mary’s response was simple and straightforward: “You could cut your own hair for free, but a professional can do a better job, right? If you don’t know how to do something, why wouldn’t you hire a professional?”

Paid credit repair

Mary’s answer gave Denise the confidence and resolve she needed to move forward. She researched legitimate paid credit repair services and chose Lexington Law. The cost was affordable, and they promised improvement within three months.

Once Denise signed up, Lexington immediately started working on her behalf. “I got my credit reports for them. Other than that, they did all the work. They made the calls, wrote the letters. Within a month they were knocking negative stuff off my reports.”

Credit education was not lost on Denise. She knew she needed a primer on good credit habits if she wanted to protect her score in the future. “Lexington explained what was going on every step of the way. I understood that I could do this myself. But every time I had tried in the past, I gave up. It was too much. I didn’t have all the answers. They taught me a lot about my credit and helped me fix it at the same time,” she says.

Denise’s credit score went up dramatically. She cancelled the service after three months even though a serious negative item remained on her credit report, because the improvement she had gained was satisfactory. “I still had an old judgment, but it was paid and I knew it was going to come off my report in another year or so. Plus they taught me what to do if the judgment wasn’t removed from my credit report when it was supposed to be removed.”

Building credit

Denise wanted even better credit, and again turned to her sponsor for suggestions. It was springtime and Denise expected a tax refund of several hundred dollars. “Mary told me to go to the bank and put that money down on a secured credit card,” says Denise. She did, and at the age of 47 received her first credit card. She used the card sparingly and paid the balance off in full every month. After about a year, the bank converted the account to unsecured and returned the money (plus a small amount of interest) that Denise had deposited as collateral. “My new card had a $1,000 limit and no annual fee. I put the $500 in savings, and started to add a little every month. That helped me avoid charging up the card.”

“Denise was lucky to get solid advice from her sponsor. The way to earn great credit is to have and use credit products responsibly. There is no silver bullet,” says Ulzheimer.

Credit Opens Doors

After cleaning up her credit reports, Denise continued to pay her bills on time and avoid debt. Denise’s credit score went up to 732.

In 2012, Denise’s car was rear-ended and was a total loss. She received an insurance settlement, but not enough to replace the car. Apprehensively, she went to a dealership and applied for a car loan. “I couldn’t believe it. They approved me on the spot for a 5.5% loan. I was floored,” she recalls.

Denise protects her credit carefully now. Her score has seen a few ups and downs. In late 2014, her dog needed $800 in veterinary services. She didn’t have enough cash reserves to cover the bill. When she charged it, she nearly maxed out her credit card and saw her score drop immediately. “I wasn’t worried, though. I knew I’d be able to pay it off with my tax refund, and when I did my score went right back up.”

Now, Denise makes plans. She takes vacations with her daughters. She buys things for her home that she could never afford before, like a new washer and dryer. She wants to eventually lease a large house and take in foster children, and now she’s not afraid of submitting her application for the rental. All of these things are possible because of her great credit score and the watchful eye she keeps on her budget.

Denise’s greatest pride is in her ability to teach her daughters how to build, monitor and protect their own credit. “Being able to show them how to have great credit is one of my greatest parenting achievements,” she says. “I’m really preparing them to be on their own financially, and that makes me feel so proud.”

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