Give me some credit

creditOne of the lessons that I learned when I was a teenager came from watching my sister. I lived with her and her husband in Tujunga, CA and I was there the day she got her first credit card. When she opened up the envelope with her first credit card, she and my brother-in-law were literally jumping for joy. My sister even jumped into his arms. The next thing that happened was new furniture, over spending, debt and bankruptcy.

My sister taught me a huge lesson, and that’s to NEVER get a credit card, like ever ever ever. But that wasn’t the right lesson. You see, here is the lesson that I should have learned. Only spend what you CAN afford to pay back. Don’t max the card in the first week, just buy one thing that you normally couldn’t afford, pay it off, then buy something else.

Last year when I was 44, I decided that I was sick of having no credit. The only way for someone to build their credit is to have a secured credit card, but I could never afford to get one because the bank always wanted $200 or $300. I conveniently got a letter from Bank of America offering me a secured credit card for only $99. I took advantage of that opportunity and sent them $99 and I received my first secured credit card with a credit limit of $500. They told me that I would receive that $99 back in one year, and because I was good about paying back what I spent, they sent it back to me in 9 months and raised my credit to $2000.

I’ve been using a website called Credit Karma to check my credit score, that is it in the image above. 714 and 720. I think that’s pretty good for someone who has only had credit for less than 12 months.

High Impact

Credit Karma gives me tips on how to maintain my good credit, and one of those tips is to only use 30% or less of your credit, and I just so happen to only be using 20% of mine. That is a high impact factor in my credit report. My payment history is excellent at 100% since I have been paying for my credit card on time every month. The bank only asks for $25 payments, but I have been paying $100 a month. Some months I have paid $200. I also have 0 derogatory marks on my credit, which is obviously a good thing.

Medium Impact

My age of credit history is a medium impact, but I cannot help that I only have had credit for a year. The longer you have a credit card, the better that number will be, and it can only get better from here.

Low Impact

I only have 1 credit account, which apparently is a factor in my credit history, and it is not good since I only have 1 credit card. I guess the more credit cards you have, the better, but this is low impact so I am not worried about it since my credit rating is so high. I would be more worried if my credit was in the red, but since this is low impact, I’m not going to worry about it at all. Another low factor is credit inquiries. Zero is ideal, but I have 1 on Equifax and 2 on TransUnion. The reason is because I tried to get a regular credit card last year without having a secured credit card first. They checked my credit and I didn’t have any, so they denied me.

I am not an expert on credit, but I do think that I am doing pretty good for someone who has just begun. I am where I should have been 20 years ago, and I’m actually glad I waited so long because I fear that if I followed my sisters bad behavior, I’d probably have no chance of ever having good credit, and that is not a good thing.

Now, the next thing on my list is to learn to drive. Can a 45 year old learn to drive, and why the heck did I wait so long?