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Alex Hales

Published on: 30 Mar 2017 by alex-hales

How to Build a Good Credit Score as a Single Mother

My divorce was finalized just 8 months ago so now I am a single mother of two. My elder son is 6 and goes to a public school and my younger son is still in kindergarten. My ex-husband is not a bad father but his income is very limited.  As a result, I had multiple credit cards to try to pay for bills. Things got even tougher for him because he also has a child from his first marriage so I understand how hard it must be for him to pay child support for his three kids. That is why I never pushed him to pay more than what he offered.

I myself work 9 to 5 as a creative writer with an advertising agency. I love my job and it pays well but with bills and two kids it doesn’t allow me to save much. Therefore for extra cash I started taking freelance writing jobs after my divorce. They do not pay as much as I would have liked, but it is better than nothing. They pay for my children’s day care.

Things were different when I was married even though I was making more than my ex-husband but we had agreed to use his salary for bills so we could save more from mine. He also took care of our credit cards so I never paid much attention to how they were being managed. I only knew the basics.

Right after my divorce I had a long chat with my best friend Judy and her husband Bill about how I need to manage my own finances now. Bill was very helpful and gave me priceless tips on what I needed to focus on.  I had to build up my credit again.  However despite all his guidance it was me who had to take charge of my own finances.

He told me that since now I was in charge of myself and my kids’ welfare I had to be careful especially with my credit cards. He made it very clear to me that in future I may have to take some major loans and in order to be able to apply for loans, mortgages, car leases etc I had to build and maintain a very good credit score.

This had me worried because as a single mother as I had no idea about how I would do that. He told me about a website that held detailed information on how to build credit scores. This helped me a lot.

At the moment I am living in a rented apartment, but I fully intend to buy my own house in the next few years. I also just bought my own car on lease. I know with a car lease and mortgage my finances will have to be managed very carefully.

The first thing Bill asked me to do was to find out what my current credit score was. Since I never applied for a loan or never had to purchase anything major using my credit card I couldn't have been in a bad position.

Next Bill told me to get my credit card report regularly. This allowed me to evaluate my purchases and see what could be avoided in order to keep my balance in check. Moreover it was also very important to check the report for errors.

I also was advised to make sure that I paid my balance in full each month. Not only would this result in no interest due to delayed payments, but would also help me build a good credit score. Bill also said that I should have a payment plan that allowed me to make multiple payments each month instead of paying just once a month.

Now this had me confused, so I had Bill explain it to me. He said that multiple payments throughout the month are helpful because your credit issuer gives your credit report to the credit bureau once a month. The report submitted to the bureau contains the balance you had at the time the report was made. Since that report could be made on any day of the month so if you made the payment just a day after the report was made then it would not show on your report. Therefore it is best to keep your balance low throughout the month by making multiple payments.  

Bill told me to be very efficient with my car lease loan. He said once I paid off the lease it could be put down on my credit report as a good debt.  I sought to look for credit cards for bad credit to help rebuild my bad credit.  Basically it would become my “history” of managing my debt well, which would help me in building up a good credit score.

The website Bill told me about had a very important tip to stay away from pay-day loans. Payday loans are a perfect trap for single parents like me who need to pay off big loans and need money quickly. People are usually forced to take them in case of emergency payments. Since they are taken at the time when finances are tight it is quite possible they cannot be paid back in time, which is bad for our credit score. Therefore I made a mental note to avoid these loans and to take them only if I was sure I could pay back on time because in that case they have a positive impact.

I also found out that applying for a credit building loan is a good option. This type of loan is designed specifically to help the borrower build a good credit score.

It is also a very smart move to become an authorized user on a family member’s credit card. This helps you build a credit history without legally binding you to pay off your charges. It is best to make sure that the card issuer reports credit activity of the authorized user to the credit bureau otherwise you may not be able to benefit in terms of credit score.

Bill also advised to get credit for the apartment rent I was paying. He said that if I was sure I could pay easily every month then I should put the bill on my credit report. This would allow me to build a good history of making on-time and regular payments.

After understanding a few technicalities it is all about being smart about how I am going to use my credit card. I know I have a lot of work to do before I can think of buying a house but I know I am on the right path. I believe every housewife should at least try to understand how credit card and credit score work because unfortunately many a times a divorce can leave you with an extremely poor credit score and huge debts on your credit card. There are ways to fix that but it is better to be safe than sorry.


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