She Raised Her Credit Score From 560 to 730 In 2 Years. Here's How.

Casey Bond

Like many 20-somethings fresh out of college, Adriana Dikih wasn’t the best at managing money. The 32-year-old digital marketing professional and vegan food blogger, who lives just outside of Portland, Oregon, went through what she called a “credit catastrophe” after graduating.

Dikih earned a degree in liberal arts, but like many new grads, couldn’t find a solid job to pay off that expensive education. “I was working in restaurants like a lot of my generation is,” she said. “I think it’s really relatable what I went through.”

Adriana Dikih, who blogs about vegan food and recipes, poses in her kitchen.  (Photo: Instagram)
Adriana Dikih, who blogs about vegan food and recipes, poses in her kitchen. (Photo: Instagram)

She wasn’t struggling by any means. She was able to provide for herself, travel and even save a bit of money. “But I wasn’t as interested in monitoring my credit or paying my bills,” she said. Student loans, in particular, were a major monthly expense that fell by the wayside. “I tried to go through the process of deferring. I wasn’t able to ... and I just didn’t pay them. Not a wise move.”

Deep down, she said, there was a gnawing feeling that her credit was a mess, but she kept her head in the sand due to fear and shame. “I didn’t know and I didn’t want to know,” she said. “I didn’t want to actually hear a number, because I think a lot of us associate that number with a reflection of our worth. If we have a bad credit score, we’re a bad person, we’re irresponsible.”

Of course, a credit score is just that ― a number. It’s not a measurement of character or intelligence. But a poor credit score can definitely wreak havoc on your financial life, and it requires some dedication and patience to fix. That’s exactly what Dikih learned. Here’s how she got her credit back in shape.

From ‘Out Of Touch’ To In Control

Every few months, Dikih’s car would break down and need expensive repairs. She had financed her last car purchase and knew that if she wanted to take out another loan for a new car, the dealership would pull her credit first. That was the trigger that caused Dikih to get hold of her credit situation. “I thought, ‘OK, I need to sit down, pull my credit and see where things are,’” she said. She requested her credit score information online, printed it all out, took a deep breath and faced reality.

“It was a 560,” she said, admitting she was actually relieved to see that number. “I thought, I don’t know if a credit score can be a 200, but mine might be,” she joked. A 560 seemed like something she could tackle.

Next in her plan of action was to find out what, exactly, was contributing to the low score. “I didn’t even know what debts I had outstanding or whether I was in collections,” Dikih said. “I was just really out of touch with what was going on with my finances.”

Once she pulled her credit reports, it turned out there were three major issues causing her poor credit. The first was an old phone bill that was never paid and sent to collections.

“When you have a bill that you haven’t paid, the late fees and fines and penalties can mount up to be more than the actual amount you owed,” she said. Dikih began researching how to negotiate with debt collectors and settle for less than what’s owed. In the end, the original bill of only about $50 ended up costing her a few hundred dollars. But knocking a delinquent account off her record helped fuel her commitment to getting her credit back in good shape. “It hurt, but I was totally pumped and motivated.”

Next on the list was a credit card with a balance of about $2,000, which she paid off using savings.

Finally, Dikih needed to get her student loans, which were on the brink of default, back in good standing. “The student loans I’m still carrying with me,” she said. “I’m paying on time every month now, but I still have derogatory marks on my credit that will stay with me until seven years after they’re paid off ― which is, you know, when I’m 70.”

Eventually, she was able to finance a new vehicle at nearly 20% APR, “which is outrageous,” she said, “but I was willing to do that in order to start establishing a positive payment history.” Recently, she was able to refinance her auto loan down to 2% APR.

She also opened two secured credit cards. After six months of on-time payments, the card issuers transitioned them to real credit cards. Her fiancé, who had great credit, also added her as an authorized user to a few of his credit cards. They even bought a house together.

Despite a few lingering negative marks on her credit, Dikih’s score gradually rose thanks to her hard work. After about two years, it now hovers around 730 ― considered to be well within the “good” range.

Don’t Let Fear Sabotage Your Financial Life

Though Dikih considered hiring a credit repair company to help her fix her credit, she ultimately decided she could do it on her own. After all, her biggest obstacle had been her own lack of willingness to be proactive. “I used Google to find everything. … I had a fire under my ass to get it fixed.”

She kept tabs on her progress, and every small bump in her score was enough motivation to keep going. “For me, the biggest thing was getting over the fear,” she said. Once she knew where she stood, it was just a matter of making her finances a priority.

“It’s just a number,” she said, one you have control over if you choose.

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Also on HuffPost

Myth 1: You should stay away from credit ― period.

<strong>Truth:</strong> Some financial experts, like <a href="https://www.daveramsey.com/blog/the-truth-about-debt">Dave Ramsey</a>, say you should never take on <a href="https://www.huffpost.com/topic/debt">debt</a>. The thought is that too many people struggle with debt and the risk of borrowing money simply isn’t worth it. But in today’s credit-centric world, avoiding credit cards or other types of debt makes accomplishing other financial goals incredibly difficult.<br /><br />Those who avoid using credit are at risk of never developing a strong credit history, according to Eszylfie Taylor, president of <a href="https://www.taylorinsfin.com/">Taylor Insurance and Financial Services</a> in Pasadena, California. “This may present challenges when a consumer looks to make larger purchases like a car or <a href="https://www.huffpost.com/topic/home-buying-and-selling">home</a>, as they have not exhibited the ability to borrow money and repay debts,” Taylor said.<br /><br />But even if you don’t plan on borrowing money for a major purchase, you can still run into trouble when renting an apartment, opening a new utility account or even getting a job if you don’t have an established credit history.<br /><br />You don’t have to put yourself in debt to build good credit. But you do need to have some skin in the game.“The simple truth is that consumers should look to establish multiple lines of credit and make payments consistently to build up their credit scores,” said Taylor.
Truth: Some financial experts, like Dave Ramsey, say you should never take on debt. The thought is that too many people struggle with debt and the risk of borrowing money simply isn’t worth it. But in today’s credit-centric world, avoiding credit cards or other types of debt makes accomplishing other financial goals incredibly difficult.

Those who avoid using credit are at risk of never developing a strong credit history, according to Eszylfie Taylor, president of Taylor Insurance and Financial Services in Pasadena, California. “This may present challenges when a consumer looks to make larger purchases like a car or home, as they have not exhibited the ability to borrow money and repay debts,” Taylor said.

But even if you don’t plan on borrowing money for a major purchase, you can still run into trouble when renting an apartment, opening a new utility account or even getting a job if you don’t have an established credit history.

You don’t have to put yourself in debt to build good credit. But you do need to have some skin in the game.“The simple truth is that consumers should look to establish multiple lines of credit and make payments consistently to build up their credit scores,” said Taylor.

Myth 2: Closing credit cards will raise your credit score.

<strong>Truth:</strong> If you paid off a credit card and don’t plan on using it again, closing the account can feel like the responsible thing to do. Unfortunately, by closing it, you can inadvertently harm your credit score.<br /><br />According to Roslyn Lash, a financial counselor and the author of <i><a href="https://www.amazon.com/Fruits-Budgeting-Effective-Spending-Savings/dp/197918187X/ref=sr_1_1?ie=UTF8&qid=1528151172&sr=8-1&keywords=The+7+Fruits+of+Budgeting&tag=thehuffingtop-20">The 7 Fruits of Budgeting</a></i>, this has to do with your credit utilization ratio. This ratio represents how much of your total available credit you’re actually using ― the lower your utilization, the better your score.<br /><br />If you close a credit card, your available credit immediately drops.“If you have less credit but the same amount of debt, it could actually hurt your score,” Lash explained. In most cases, it’s better to cut up the card but keep the account open. Setting up account alerts can help you keep tabs on any activity or fraudulent charges.
Truth: If you paid off a credit card and don’t plan on using it again, closing the account can feel like the responsible thing to do. Unfortunately, by closing it, you can inadvertently harm your credit score.

According to Roslyn Lash, a financial counselor and the author of The 7 Fruits of Budgeting, this has to do with your credit utilization ratio. This ratio represents how much of your total available credit you’re actually using ― the lower your utilization, the better your score.

If you close a credit card, your available credit immediately drops.“If you have less credit but the same amount of debt, it could actually hurt your score,” Lash explained. In most cases, it’s better to cut up the card but keep the account open. Setting up account alerts can help you keep tabs on any activity or fraudulent charges.

Myth 3: Checking your own credit hurts your score.

<strong>Truth:</strong> Certain types of credit checks can have a temporary negative effect on your credit score ― but checking your own credit is not one of them.<br /><br />Checking your own credit results in a “soft” inquiry, which doesn’t affect your score, according to Adrian Nazari, CEO and founder of free credit score site <a href="https://www.creditsesame.com/">Credit Sesame</a>. Other types of soft inquiries include when you’re pre-approved for a credit card in the mail or a prospective employer runs a credit check as part of the hiring process.<br /><br />You can check your credit score as often as you want with no consequence. In fact, you should check it regularly; a sudden dip could indicate a problem or possible fraud.<br /><br />Sites such as Credit Sesame and Credit Karma allow you to see your VantageScore 3.0 for free, though you should know this is usually not the score that lenders review. The most widely used score is your <a href="https://www.huffpost.com/topic/fico-scores">FICO score</a>. And though there are services that charge a monthly fee to gain access to your FICO, you can often see it for free if you have a credit card with a major issuer such as Chase.
Truth: Certain types of credit checks can have a temporary negative effect on your credit score ― but checking your own credit is not one of them.

Checking your own credit results in a “soft” inquiry, which doesn’t affect your score, according to Adrian Nazari, CEO and founder of free credit score site Credit Sesame. Other types of soft inquiries include when you’re pre-approved for a credit card in the mail or a prospective employer runs a credit check as part of the hiring process.

You can check your credit score as often as you want with no consequence. In fact, you should check it regularly; a sudden dip could indicate a problem or possible fraud.

Sites such as Credit Sesame and Credit Karma allow you to see your VantageScore 3.0 for free, though you should know this is usually not the score that lenders review. The most widely used score is your FICO score. And though there are services that charge a monthly fee to gain access to your FICO, you can often see it for free if you have a credit card with a major issuer such as Chase.

Myth 4: Making more money will increase your score.

<strong>Truth:</strong> When you apply for a credit card or loan, the lender will often consider your income when deciding whether or not you’re approved. But that factor is independent of your credit score, which they’ll also consider.<br /><br />It seems to make sense that the more you earn, the easier it should be for you to pay your debts, but “your income has nothing to do with your score,” Lash said. So feel free to celebrate <a href="https://www.huffpost.com/entry/how-to-ask-for-a-raise-in-2018-according-to-the-professionals_n_5a53b01ee4b0efe47ebb76cc">that next raise</a>, but know that your credit score will remain the same.
Truth: When you apply for a credit card or loan, the lender will often consider your income when deciding whether or not you’re approved. But that factor is independent of your credit score, which they’ll also consider.

It seems to make sense that the more you earn, the easier it should be for you to pay your debts, but “your income has nothing to do with your score,” Lash said. So feel free to celebrate that next raise, but know that your credit score will remain the same.

Myth 5: Credit reports and scores are the same things.

<strong>Truth:</strong> Though it represents the same types of information, your <a href="https://www.huffpost.com/topic/credit-report">credit report</a> is not the same as your credit score.Think of a credit report as your financial report card and your credit score as the overall grade.<br /><br />“Your credit report is a record of your credit accounts … [including] your identifying information, a list of your credit accounts, any collection accounts you have, public records like bankruptcies and liens and any inquiries that have been made into your credit,” said Nazari.<br /><br />On the other hand, your credit score is a three-digit number that represents how likely you are to repay your debts based on the information contained in the report. Your score is “based on a complex algorithm that evaluates your relationship with credit over time,” explained Nazari. “Your credit score is not included on your credit report.”
Truth: Though it represents the same types of information, your credit report is not the same as your credit score.Think of a credit report as your financial report card and your credit score as the overall grade.

“Your credit report is a record of your credit accounts … [including] your identifying information, a list of your credit accounts, any collection accounts you have, public records like bankruptcies and liens and any inquiries that have been made into your credit,” said Nazari.

On the other hand, your credit score is a three-digit number that represents how likely you are to repay your debts based on the information contained in the report. Your score is “based on a complex algorithm that evaluates your relationship with credit over time,” explained Nazari. “Your credit score is not included on your credit report.”

Myth 6: Once delinquent accounts are paid off, your slate is wiped clean.

<strong>Truth:</strong> Paying off past due accounts will get the debt collectors off your back. But when it comes to your credit, the damage can last years after you’ve made good.<br /><br />“Your credit report shows positive and negative accounts, including collection accounts, discharges, late payments and bankruptcies ― some of which can be on your report for up to 10 years,” explained Nazari.“That said, some collection agencies openly advertise that they will stop reporting a collection account once it’s paid off,” he added. <br /><br />If that’s the case, keep an eye on your credit reports to make sure the delinquent account is removed. In most cases, however, you’ll have to live with the mark until it expires. Fortunately, its impact on your credit score should decrease with time, depending on the type of debt.
Truth: Paying off past due accounts will get the debt collectors off your back. But when it comes to your credit, the damage can last years after you’ve made good.

“Your credit report shows positive and negative accounts, including collection accounts, discharges, late payments and bankruptcies ― some of which can be on your report for up to 10 years,” explained Nazari.“That said, some collection agencies openly advertise that they will stop reporting a collection account once it’s paid off,” he added.

If that’s the case, keep an eye on your credit reports to make sure the delinquent account is removed. In most cases, however, you’ll have to live with the mark until it expires. Fortunately, its impact on your credit score should decrease with time, depending on the type of debt.

Myth 7: You can max out your cards as long as you pay the balance every month.

<strong>Truth:</strong> Paying your bill in full every month is the key to avoiding interest and building a solid payment history. But who knew that racking up a balance midmonth could hurt you?<br /><br />That’s because the date that credit card issuers report your balance to the credit bureaus is often not the same date as your payment due date.<br /><br />“For a better credit score, keep your balance under 30 percent of your card’s total limit,” recommended Nazari. So if your card has a limit of $1,000, you should avoid carrying a balance of more than $300 at any time.<br /><br />However, if you want to be able to use more of your available credit, you can pay down your balance before it gets reported to the bureaus. Usually, said Nazari, it’s the same as the statement closing date, but you should check with your card issuer to be sure.
Truth: Paying your bill in full every month is the key to avoiding interest and building a solid payment history. But who knew that racking up a balance midmonth could hurt you?

That’s because the date that credit card issuers report your balance to the credit bureaus is often not the same date as your payment due date.

“For a better credit score, keep your balance under 30 percent of your card’s total limit,” recommended Nazari. So if your card has a limit of $1,000, you should avoid carrying a balance of more than $300 at any time.

However, if you want to be able to use more of your available credit, you can pay down your balance before it gets reported to the bureaus. Usually, said Nazari, it’s the same as the statement closing date, but you should check with your card issuer to be sure.

Myth 8: You need a credit repair company to fix your bad credit.

<strong>Truth:</strong> Poor credit can feel like an emergency, especially if it’s preventing you from borrowing money you need. Credit repair companies bank on that sense of urgency, literally. And though there are a lot of shady credit repair agencies out there, the truth is that even the legitimate ones rarely do anything for you that you can’t <a href="https://www.huffpost.com/entry/5-easy-steps-to-repair-your-credit-for-free_n_58de7708e4b0d804fbbb721b">do yourself</a>.<br /><br />“The good news is that one’s credit is ever changing and can be repaired if there have been some missteps in the past,” Taylor said. “In time, issues from the past will pass and credit can be restored ... no matter how bad it is today.”
Truth: Poor credit can feel like an emergency, especially if it’s preventing you from borrowing money you need. Credit repair companies bank on that sense of urgency, literally. And though there are a lot of shady credit repair agencies out there, the truth is that even the legitimate ones rarely do anything for you that you can’t do yourself.

“The good news is that one’s credit is ever changing and can be repaired if there have been some missteps in the past,” Taylor said. “In time, issues from the past will pass and credit can be restored ... no matter how bad it is today.”

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This article originally appeared on HuffPost.