When I checked my credit score two years ago, it was categorized as very poor. Low 500s. Even though I knew I was more than a number, I couldn’t help but feel shame about how I had managed my money over the past 6 years. From age 18-21 I made a serious of bad financial decisions, and at 25, they were still haunting me.
I had no active accounts, just a bunch of collections. Unpaid hospital bills, cable bills, an eviction, a delinquent credit card. It was horrible. However, all my bad debts are still on my credit report, yet my score is now in the high 600s. At one point it was even over 700 (more on that later.)
How did this happen? It may surprise you, but it started with a high-interest, pre-approved credit card. Somehow, with my very poor credit score, a bank offered me a card with a $300 credit limit. I was determined to use this miracle credit card for my benefit, and to not screw it up like I had done before.
What I did
My wise older brother gave me some advice. He told me to put a recurring payment on my credit card, and to set up autopay to pay it off every month. So I put my $9.99/mo music streaming account on my new credit card. And then I cut it up.
I call this the “set it and forget it” method. I am sure many people have tried the “just charge one inexpensive thing on your card and pay it off every month” trick. And I am sure it works for some people. But I knew I did not have that kind of self control. I knew if I had a card with money on it I would use it.
After a month my score shot up to over 600. After 2 months, my student loans kicked in and shot my score up again. After 3 months, my score was over 700, my credit limit increased by 10x to $3000 and I even got pre-approved for a $30,000 car loan. More pre-approved cards came streaming into my mailbox.
Now having pre-approved credit cards and $30,000 car loans sent to me were tempting of course. But nowhere near as tempting as having a credit card in my wallet with a $3000 limit would have been. If I had not cut up my card, I guarantee you that $3000 would have been put to use. A TV here, a shopping spree there. I would have had a million reasons as why I needed to buy something.
Because I cut up my card, I cannot use it. I am forced to live within my means. I purposely did not write down the card number or CVV. If I want a new card, I have to get on the phone with a bank. These are all built in obstacles I set up for myself.
The “set it and forget it” method also works for people who have paid off their credit cards and do not want to close their accounts. Just put a low $ recurring payment on your card and cut it up. Closing accounts is a detriment to your credit score. The only reason my score is below 700 is because I have been paying off my student loans quickly and multiple accounts have been closing. My “set it and forget it” credit card has been boosting my score in the background.
What are your thoughts on this?