Finances are often a taboo in your 20's. I am 29 years old and as most of my generation, struggling to stay afloat. I mainly operate from a bi-weekly budget that helps to keep my finances in perspective. My yearly salary is between 50 and 60K. I currently pay partial rent with my spouse and do not own a vehicle or pay car insurance at the moment. The bulk of my bills are contributed among paying my phone bill, past credit card debt and collection items that are negatively affecting my credit.
I faced a recent setback in the past year that made my bills fall behind in payments. Before this unexpected dip, I was approaching a 700 credit score. Now, I am operating at a credit bracket of 520-540. How?, you ask. It's quite simple to fall behind, but the agenda now is to improve my credit in order to qualify for my first home buying purchase. I have the resources and information known to improve my credit. My first step is pulling my report. At the moment, I use my credit karma
tools to be able to review my full report and dispute any of the charges that I have satisfied currently. My most recent accomplishment were two collection items that were listed on my report. I always start with the debt that is the lowest in cost. This helps to be able to tackle the items easiest to pay. Credit Karma has a dispute button for each item that allows for the dispute to be reported directly to the creditor for review.
It takes a time period of 30 days or less for the investigation of the disputed item. For each item that is listed on the report, it is placed under a category of hard inquiries, derogatory, and level of negative affects to the credit. Currently, I am working to pay my credit card debt down but when choosing to invest in a credit card, it is best to just have ONLY one major card. This way, you credit usage is easier to manage. The percentage of usage should not exceed 30% of the overall credit limit. In my case, I faced financial hardships which made my balance exceed that amount. The result of non-payment became a closed account. What I am working to do at the moment, is satisfying the settlement balance. In the matter of a closed account, the creditor is always willing to take some form of paying the balance off. They will settle for between 50-60% of the original balance owed. This helps in the case of trying to pay the balance off completely.
In my case, I made phone calls to the two major credit cards that I owned and was informed that the original balance has decreased by 40-50%. This has helped me tremendously. I can either opt to sign up for a monthly payment or pay in a lump sum. I am working to have this paid by tackling each credit card one at a time. I have not yet made payments on this amount. I have currently submitted disputes for both the collection items and will be waiting to see how this increases the score. The collection items are classified as high impact items. This is why I took care of these first. The credit card balances will be next.
The goal from now until May of 2019 is to increase my score from a 520 range to a 640 minimum. The range of being approved through a first time home buyers program is 620-640. Though my minimum goal is 640, my maximum goal is a solid 700. I will decrease the amount of debt in half or more than half. The only reoccurring debt will be student loan payments. The talk about credit and finances are hard but it helps to do some of these few things
1. Create a Realistic Budget of Money You Have
2. Constantly check your account
3. Create a savings account of at least $100 emergency money
4. Make Happy Purchases
5. Monitor Your Credit ( Credit Karma)
6. Take Care of Small Ticket Bills
7. Don't operate in debt!
8. If in debt, Create a Way out!