One of the best feelings in the world, at least in the personal finance world, can be raising your credit score if you are coming off challenging financial times. As much as Dave Ramsey wants to claim credit scores are not necessary, it certainly helps to get approvals without large deposits.
This is precisely the achievement that one Redditor just wrote about in r/CRedit. They are simply thrilled at having achieved their goal of raising their score enough to get approved for their dream car. Their story should inspire others who may feel hopeless, but it’s not.
The best part about this story is that it shows you that fixing your credit score, no matter how bleak things seem at times, is possible and won’t require forever.
The Situation
In this specific instance, you have a Redditor who had a credit score from Transunion of around 535 and just felt hopeless. However, in one year, they worked hard and incorporated a lot of advice they received from other Redditors, and 12 months later, they now have a score of 667 from Transunion, an increase of 132 points.
The result is that this Redditor can now score approval for their dream car, which likely means they qualified for a loan at a manageable interest rate, or at least that’s what I hope it means. We later learn this is a 2019 BMW 44i Gran Coupe, which he was able to get after working with a local credit union.
This fantastic scenario is far more common than most people think, as bringing up your credit score by making small, simple changes to your life can make big improvements.
How It Happened
In one of the comments, the Redditor highlights that the best advice they received was “there is no elevator up or magic that fixes your credit but your consistent efforts that go the distance.” This couldn’t be more of an accurate quote in that there isn’t anything you can magically do, no matter what late-night television infomercials tell you that can magically fix your score.
Instead, the Redditor highlights that they took advantage of the “snowball method,” a popular way to get yourself on track and control your credit card balances and other interest-related payments.
In this regard, the Redditor acknowledges that they got a second job and worked very hard to pay everything down over three months, which allowed them to get back on track. Everything made at the second job income-wise went directly to paying off debt, and they lived on the money they were making from their primary gig.
The Snowball Method
One of the most popular debt methods, the snowball method, has been around for some time. As it did for this Redditor, it has successfully helped countless individuals get their debt under control. So, what is the snowball method, and how did it work for this Redditor?
Thankfully, the snowball method is not complicated. You start by listing all your existing debts, from largest to smallest, based on your balance. This method doesn’t factor in interest rates, just your outstanding overall balances.
The second step is to make minimum payments on everything except the smallest debt, which will receive any extra money you have available. In this case, the Redditor used all his extra income from his second gig to boost the smallest balance payment.
After the smallest balance is paid off, you’ll take the amount you were paying and apply this to the minimum payment you have been making on the second smallest balance. You’ll continue repeating this process until you pay off debts one by one and until you are debt-free.
The Redditor explains that every debt paid off had a massive psychological benefit, and it gave them an immediate confidence boost to move on to the next smallest balance and keep going until they achieved their goal.
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