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.”
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.