27 June 2018
Growing up the adults around me always gave great advice, but one particular thing stood out to me the most, strong credit. I first started my credit journey shortly after turning eighteen and graduating. The first place I applied to was at my local Target store. They told me they would send me something in the mail letting me know if I was approved or not, but I didn’t get anything. I told my parents about the situation and they told me Target was out of my league and that they wouldn’t give credit to some kid with no credit history, I was quite disappointed. Not too long after, my father and I were casually walking through a small local retail store called The Curacao when he advised me to apply for credit here since they were a smaller company and would probably be more willing to work with me. I thought why not so I applied and to my surprise they approved me for five hundred dollars to their store.
My first purchase on credit was a brand new PlayStation 4 Pro. I bought it immediately after being approved and I was just proud to finally start engaging in an actual adult practice. My PlayStation came out to about four hundred and fifty dollars which I knew was way over the recommended thirty percent utilization rate but I was excited and it was an impulse purchase. My father though was quick to lecture me on the importance of paying off my debt as quickly as possible and not taking on a bigger load then I could handle. Since my father at the time had an impressive 870 credit score, I considered him the absolute guru of credit and took his advice extremely seriously.
About One month after, I received my first bill statement with the minimum payment due notice. I did some calculations and came to the conclusion that at this rate it would take me five months to pay off my first purchase and that I would be paying about a hundred dollars in interest. I didn’t like the sound of that so decided to send in more than the minimum payment, just like my father advised. I ended up paying it off in only three months and paying less interest then what was originally intended. I was so proud. At last I had fully payed off my first item on credit and now had my eyes set on other things.
Over the course of the next couple of months I purchased two more things a television for the living room and then a laptop for my sister. The Curacao had actually raised my credit limit to eight hundred after paying off the television so I was convinced that I was on track to developing a strong credit score. The day we went to purchase my sisters’ laptop I just handed my dad my credit card to purchase it because I wanted to look around the store. The cashier associate asked my dad for ID and he pointed out that it wasn’t actually his card and called me over. The cashier said “whoa, your credit is pretty good, I actually thought it was your dads.” I didn’t actually know my exact credit score so I decided to find out through a free service my bank offers. My credit score was set at 686. I didn’t know how to feel about that. I knew that it wasn’t a great score but not awful either and my dad did say a great credit score takes years to develop. I was ready to take on a little more though. I wanted to attempt something bigger.
Ever since my parents told me Target was out of my reach, I was discouraged from applying for credit at all my favorite big retail stores especially since I knew that applying for new credit does lower your score. I knew I’ve been working hard and owed it to myself to take a little risk. After about a year of obtaining my credit card, consistent purchasing on credit, and paying the bills on time I finally decided to apply at my all time favorite store, Best Buy. To my amazement I was approved and granted two thousand and five hundred dollars on my new Best Buy credit card. Just like the first time, I was excited and compulsively bought myself something, a Television for my room. Shortly after I was introduced to a new concept called special financing. Best Buy has special financing options where certain products bought on credit have no interest rate for a certain number of months. For example, The television I purchased has no interest for eighteen months so as long as I pay it off it within that time frame, I won’t spend a cent more on it other than its actual price and tax. In addition to the television, I also eventually over time bought a Wi-Fi router, an apple watch, and a speaker. Of course, I was still paying all my bills on time so my credit score should have been growing this entire time, or so I thought.
In the eight months I’ve had credit with Best Buy my credit score has being moving around more than I’ve ever seen. Almost immediately after being approved and buying my television, my score jumped all the way down to 664 and then to 615. I was completely shocked. The next month it went up to 640 out of nowhere, and up to 650 the next. Since January it seems my score seems to want to stay in the 650 to 655 range. I currently have a 658 but it will most likely have decreased the next time I check.
Based upon some of my past internet research on why credit scores won’t increase, the most probable reason for me is I always have a remaining balance. Though I do keep a healthy utilization rate and do pay my bills on time, the credit bureaus want to see you actually pay off all your remaining balances. I consistently have owed Best Buy about one thousand dollars for the past six months. I’m usually paying off two products at once and every time I pay one off I will reward myself with another purchase. At first I saw no harm in this but now have learned that it may be what’s stunting my credit scores growth. As of last month, I’ve elected to not purchase any more products from Best Buy until I have completely paid off my current
I’m glad I started my credit journey as soon as possible. It’s better to start while were young so that we have enough lenience to mess up as opposed to messing up when your older when your life is more dependent on your credit score. Credit is something you have to play and tinker around with until you have the hang of it. I’m not a master of credit. I am still learning from my father, the internet, and by actually putting myself out there and trying. My credit journey is not anywhere near over, it’s still in its developing phase and will continue to do so for the rest of my life. In the meantime, I just have continuously to contribute and work towards it. Hopefully someday I will master this important tool for todays society and spread my knowledge to others.
Detweiler, Gerri. “How to Build Credit If You Are New to the United States.” Credit.com, 4 Aug. 2014, blog.credit.com/2011/02/how-to-build-credit-if-you-are-new-to-the-united-states-11327/.