Live in the moment is excellent advice when applied to many things in life, but building a solid credit score doesn’t usually fall into one of those categories.
Taking care of your credit requires awareness, forethought and an understanding of the different factors that can affect your credit rating.
Ideally, credit education is something you have access to before getting your first credit card. But unfortunately for many of us, we learn the essential lessons of maintaining a healthy credit score the hard way.
Mission Lane member Roberto grew up in a house full of love and music in El Salvador. His father, a high ranking U.S. Air Force officer, would play cumbia songs starting at 6 AM so that his family would get up and have breakfast with him.
“The first credit card we ever had was my father’s Diners Club card,” Roberto told us. “He would always pay off the balance at the end of the month, so he almost used it like an advance on his paycheck. He did so well with it that after a few months they tripled his limit from $2,000 to $6,000.”
Roberto wishes he’d had more opportunity to build credit in his youth under the watchful eye of his parents and with spending limit guardrails in place.
“Today, it's easy to give your kids a card that’s on your account with a low limit. But back then, when I needed something like tires for my car, he would just give me cash for it, so I never had any experience with credit.”
That changed, however, when Roberto moved to Hollywood, California, to live with his uncle and attend college. It was there that he had his first experience dealing with his own credit card.
“I was walking through the quad and they had a booth where they were signing people up for gas cards. I didn’t even have a car yet but I signed up for one anyway. I told them how much money I made, but they never verified that and just gave me the card.”
Using his college student logic, Roberto decided that since he had a gas card, he should get a car that he could put gas in.
“I bought a car that was way too expensive. I loved it, but my entire paycheck went to the car. I didn’t have anything leftover to help my Uncle with the rent.”
With a low limit and a low-paying job Roberto maxed out his new credit card almost immediately and unlike his father who paid off his balance monthly, Roberto made minimum payments.
“I started working in a furniture store, and I had a couple of small credit cards that I treated like extra cash. I’d make minimum payments on them not understanding how that was damaging my credit score.”
Roberto compounded his credit mistake when he returned to El Salvador for a family emergency.
“In 1999 I learned my dad had been diagnosed with cancer. I dropped everything and went back home to El Salvador to help him, but I left behind a couple of credit cards that had balances on them.”
After his father passed from cancer, Roberto decided to stay in El Salvador, where he met his future wife. He made a good living working with American companies, but as the political situation in El Salvador deteriorated, he felt the country had become too dangerous for his family. He decided to take advantage of his dual citizenship and move back to America with his wife in 2017.
Back in the states, he found a good job working for a company that helps large retailers monitor their refrigeration units all across the country and arrange for maintenance teams to fix them when they break down.
Newly resettled in America, Roberto needed to open a bank account, and this is when his financial missteps from twenty years ago came back to haunt him.
“The first thing I did was go into a large, well-known bank to open an account, and they asked me about the credit cards I had left behind in 1999. It turns out that they were the ones who had issued the cards. They let me open an account but I had a withdrawal limit of $300 a day and wasn’t allowed to make purchases for more than $500.”
Roberto decided that it was time to do the hard work of fixing his credit and forming a plan to get himself into better financial shape.
“I wanted to buy a house but I knew I needed to build my credit back up because my score was very low. I got two credit cards and I always pay them off. I also signed up for credit monitoring services so that I could track my credit better. I finally looked at my credit reports and saw there were a lot of bad items on them that I needed to deal with.”
Once Roberto understood the extent of his problem, he educated himself on how to fix it.
“I found a YouTube channel where a guy explained how he pushed his credit score from 500 to over 800. I found sample letters other people had used to dispute inaccuracies on their credit reports with the credit agencies. I spent months writing my own letters to get errors removed. After six months I was able to get every bad remark taken off of my report. Now I’m sitting at 740. It was a lot of work but it was worth it.”
Now that Roberto has gone from credit novice to credit ace he’s helping his own friends deal with their credit issues.
“When my friends ask for help, I show them what to do. Then they complain that writing all of the letters is too much work, but I tell them nothing good in life is free.”
Roberto and his wife did so well rebuilding their credit, they qualified for a mortgage and are currently house hunting for their dream home.
“We want a nice backyard. I like to grill carne asada and she likes to garden. Even in our apartment we have so many plants like peppers and even papaya. After everything we’ve been through it would be really beautiful to have a place that we owned that we could share together.”
Though his journey was long, Roberto learned that while “living in the moment” is the right choice for many things in life, planning ahead is a better strategy when it comes to creating a healthy financial life.
Tell us more about your financial journey–the ups and downs, lessons learned, or anything else that could be helpful for people who are going through similar experiences.Share My Story