About 12 years ago in 2007 I bought a condo, in Oceanside, California. At the time of purchase my credit was a solid 700 score. Life was good! However once the market started to tank, my adjustable rate mortgage (ARM) shot up through the roof, and the the value of my property went to shit. You can read about that in another story on my blog .
I decided that I wasn’t going to win this battle, so I was gonna squeeze as much money on the property as I could by renting it out short term, with my plan being to do a cash for key exchange with the bank, before I foreclosed it. This way I didn’t have to foreclose my property, and I bought some extra time to try and make a little gain since I knew I was about to fuck my credit up long term.
Well that plan went to shit when my tenant decided to squat and not pay her rent.. that’s an entirely different story you might want to read about. It was a total shit show and life learning lesson. So for the next 5-7 years I basically planned on not using credit until they reset my account. Since I was in mortgage underwriting, I knew that credit scores only stay for 7 years. After 7 years they delete your score entirely.
Around 2014 I had to have my credit ran to rent out a house. To my fortune, when the landlord ran my credit it turned out I didn’t have a credit score or any lines. I was shocked because I was definitely planning on being denied for bad credit. The landlord couldn’t say I have good, or bad, credit because turned out that I didn’t have credit at all anymore.
That’s when I started geeking out hard trying to rebuild it back up. Every year around my birthday I pull my credit report for free from Annual Credit Report. One thing I’ve learned over the years is that no matter how on time your payments are, if you do not spend a lot of money, it’s hard / impossible to get your credit lines increased.
I became obsessed with understanding credit bureaus. I wanted to really figure out the best way I could increase my credit score in the shortest amount of time. A lot of blogs like Nerd Wallet, Refi.com or Credit Karma will give you great information about the best practices to use when working on repairing credit. Those are great sources for advice and helped me get some new credit cards so I could be on the map with a credit score.
The best tip in my advice was paying for a secure credit card, using it very little, and maintaining a 0 balance for 6 months. After that they change the card from secure to a normal credit card and give you a small increase in your limit. At this point, I feel like I’ve got a new game to play in order to get my hi score. However the issue for me was that it was taking way to long for my score to rise since I wasn’t spending more then a few hundred bucks on each card per month.
Until one day I had an idea I wanted to test. Again before you read on I want to make sure that everybody reading this knows I am not an Attorney ( my website Not An Attorney.com ). I am not sure if this is legal, illegal, or just shady. The only think I know is that it helped my credit skyrocket and it is not against the law to purchase things online and return them.
Since I was low on funds, it was going to be hard to show that I can spend money each month.
- What would I buy?
- How would I pay it back?
- Why buy something just to get more credit?
It seemed like there were soo many bad ideas. I couldn’t wrap my head around understand why I should spend money that I don’t need to in order to help this magical score nobody sees. If you can’t beat the system, you have to join them. So thats what I did.
Here is what I did step by step to rebuild my credit score :
- Applied for a secure credit card with a $250 limit.
- Once that time period was up and the card was a standard card, I applied to a few credit cards and got small limits. ($500-$1000 since my credit was new)
- Now I needed to purchase items. I went to Amazon.com and I would purchase things on my credit card but hat would typically take 3-4 weeks to arrive, or even longer if I could find it. To me it didn’t matter what the product was, I just needed transactions to post.
- Let the monthly statement hit showing that I spent 90% of my credit limit on each card.
- Sometimes the products would come, sometimes they wouldn’t have shipped yet. So I would cancel or refund the order via amazon.
- Once the platforms work themselves out, they will provide a refund within 10 days.
By doing this, your credit will show that you spent almost your entire budget one month and your score will drop a little bit. However by the next month, it will be back to a 0 balance, looking like you spent your money to paid it off. If you keep doing this for 6 months, you’ll be shocked at some of the credit line increases you get automatically.
Fast forward to a few years later, I have a 725 score with my average age of credit being almost 2 years old. My goal is to reach 850 score by 2025.. Think I can do it? Leave your comments below so we can see if you called it, or if I fail miserably you can say you told me so!