“My credit wasn’t on my radar,” says Alua Aumade, who only last year began to check and monitor his credit scores. At first he didn’t like what he saw, but once he started paying attention, he was able to raise his credit score by 170 points in just one year.
Aumade wasn’t a heavy credit user. He had five student loans, but otherwise he paid cash for whatever he needed. Those student loans didn’t always get paid on time, though. “If I missed a month, I would just make it up the next month,” he explains. It didn’t even occur to him that his casual approach to making payments could hurt his credit scores.
Then someone urged him to sign up for a free service to check his credit. And that’s when he realized the impact those missed payments had on his scores, which were much lower than he had hoped.
Aumade said his immediate reaction was, “Let’s focus.” He wants to buy a house someday and get a credit card with significant perks, and he knows that will require good credit.
His first step was to get on track with his student loan payments. He caught up on all of them and made a commitment to paying them on time going forward.
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But he knew that timely payments on those loans wouldn’t fix his credit quickly. His ratio of late payments to on-time payments was about fifty percent. Since payment history is the single most important factor in a good credit score, that was a problem. He created a spreadsheet and realized that even if each student loan payment was made on time going forward, it would take him years to see that percentage shift to the level he wanted.
So Aumade decided to add another credit account that he would then pay on time. He got his first credit card, a cash back reward card. Initially, that new reference on his credit reports didn’t do much for his scores. But when the issuer raised his credit limit, he saw the credit score he was monitoring shoot up. “I saw a jump of about 50 points,” he notes. He makes it a habit to make sure there isn’t a high balance on that card, which helps him avoid getting penalized for high debt usage.
He plans to add another card or two in the future so he can continue to rack up on time payments. His goal is to get his on-time payment ratio as compared to late payments into the high 90th percentile.
Now that he’s focused on building strong credit, Aumade checks his scores every Thursday. “It’s a motivator,” he explains. He also set up auto pay for the student loan servicer that permits it, so he doesn’t accidentally miss a payment. He uses auto pay on his credit card for the same reason; the minimum payment is paid via auto pay and he goes online to make the remaining payment directly.
His next goal is to qualify for a reward credit card with lucrative travel rewards. He’s trying to raise his scores to get the card he wants.
Aumade also has a side hustle, Diaspora Neckwear, that makes bowties for men and skirts for women. It brings in several thousands dollars a year in sales, which he reinvests into the business. He’s not sure whether he will try to grow it into a full-fledged business, or keep it small. He’s working on improving his design skills in the meantime. If he does decide to go all in, he’ll want to look into building business credit.
Who knows? It could become his next credit obsession.
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