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Today I have a second guest post from Dan Miller, a content contributor at Bizzmarkblog. He is a Payments officer with nearly ten years of experience in banking and international payments in the Australian banking sector. Dan has a masters degree in finance and banking. He is married and also a father of a beautiful little girl.
Dan previously wrote an article here at M$D – Loan Types -Which One Should You Apply For? With everything going on related to the Equifax breach, it’s more important than ever to make sure you’re aware of your credit report and monitoring it for fraud or incorrect information. Enjoy!
Do You Know What’s On Your Credit Report?
Having a bad credit score can hurt you in more ways than you realize. I made the same mistake, as I thought a credit score was just a fancy name that finance people use in their unique language (like lawyers and doctors). Boy was I wrong! Regretfully, I didn’t realize what it meant to have a bad credit score, up until it started to backfire.
Back in 2008, I lost my job at a restaurant, because the joint had to close down due to recession. “Oh well, no big deal. I’ll find another job eventually” – I thought. I went for nearly a year before I found employment again and my bills kept piling up. Of course, I’d pay them as soon as I managed to scrape enough money from off-the-books freelance jobs. Once I found a new job, I wanted to get a loan to buy an apartment, but the lender offered me a loan with an insanely high-interest rate that simply wasn’t realistic. When I asked what all that was about, he replied that due to my bad credit score, I present a high risk – therefore the high-interest rate.
Only then did I realize that my overdue bills and lack of employment caused a lot of damage to my credit score. I decided to get back on track and clean up my score. Here is what I did to make it happen, and hopefully my story will help someone avoid this kind of an unpleasant situation.
Found The Problem
At that time, I had no idea what to do, so I asked my friend who knew a bit more about finances than I did, for advice. She told me to check my credit reports with a company like Ondeck and start from there. So I did, and I still had no idea what I was looking at, but she explained to me that my overdue bills are hurting me, which I already knew. But what I didn’t know is that my credit cards, which I was using to get by while I was still unemployed, were also hurting me.
I managed to accumulate $18.000 debt on my credit cards. I decided to straighten things out, so I started paying bills on time because now I could afford to do it. Also, I started paying off my credit cards little by little, by paying the monthly minimum with a bit extra whenever I could. Also, I was doing my best not to use my cards but pay for everything in cash instead. I managed to pay off most of my credit cards and close them, leaving only two.
Good effort but bad results
Two years had passed and my credit score improved just a bit. Something wasn’t right and I intended to find out what it was. So, I talked to my friend again and she recommended that I consult some financial experts and figure out what was wrong. Therefore, I went and consulted with a company my friend recommended that helps people repair their credit history and they agreed to revise my reports.
Fortunately for me, they found an issue in my report, which stated that I’m still unemployed. Go figure! Apparently, my employment status wasn’t updated due to some error and that’s what has been causing my credit score to dawdle all that time. So I did what they instructed and went to my bank to complain. They updated my employment status and after a year, my credit score improved and I managed to get my loan to buy that apartment. I couldn’t believe that all that credit score stuff was so complicated and that a simple mistake can cause such a delay in a score improvement.
Bad Credit Sucks, So Keep An Eye On It
As you can see, I did what I could to save my credit score and you can say I was lucky, which I was by the way. My advice is – check those credit reports regularly and make sure you pay your bills on time. Don’t make the same mistake I did!