I’m not proud of it, but in my early twenties, I ran up quite a bit of credit card debt. Department store credit cards, a car loan, student loans. I wasn’t very diligent about paying them back on time. I was young. Adulthood seemed so far off. Real adulthood anyway.
But whether I was ready for it or not, adulthood came. First, in the form of the man who would eventually be my husband, and then everything that came with him: a wedding, a house, and our three kids.
It was when we sat with our mortgage loan officer that my financial past came back to haunt me. Although we had saved enough to put a twenty percent down payment on our house, all of those late payments caused my credit score to drop. There were things on there that I’d never considered, like a speeding ticket I’d put off paying. We ended up having to pay a higher interest rate than we would have liked, but we got into our home and began our domestic life together.
The mortgage consultant advised a few things I could do to clean up my credit, like establishing a good record of timely payments and keeping my credit card spending to less than 30 percent of my available credit. So if I had a $10,000 credit limit, I should keep the balance under three thousand dollars for optimal credit rating. I thought I should pay off all of my cards and close them out, but he said that would actually hurt my credit. That it was better to keep them at a zero balance, but keep them open. His last piece of advice was to simply maintain my regular spending habits. Not to start opening a ton of credit cards, which I had done in the past. Whenever I would make a purchase at a store, I would get persuaded by the checkout clerk to open a store card to save ten or 15 percent on my purchase.
I followed this advice and got control of my credit. With mortgage interest rates so low, my husband called our Contour Mortgage loan officer and asked if we would be good candidates for refinancing. When he ran our credit, I was thrilled to find out that all of my discipline had paid off. I had an even better credit score than my husband (not that it was a competition, but I won). We were able to refinance our mortgage to a great rate, saving us tens of thousands of dollars over the life of the loan.
I’m pretty proud of that. It feels good, like real adulthood should.
