How One Woman Boosted Her Credit Score From the 400s to the 800s

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In the summer of 2007, Lotasha Thomas knew she needed to get her financial act together. She had finally gotten a bachelor’s degree after dropping out of college in 2001 with an autoimmune disorder. She also had landed her first full-time position after years of only working part time or not at all because of her health issues.

However, Thomas was saddled with student loans, medical debt and was way behind on payments. So she was afraid to see where she stood credit-wise. “It wasn’t until 2010 that I got the nerve to look at my credit score and my credit report,” Thomas said. She still remembers sitting at her kitchen table and pulling out her computer to check her score. It was 465. “I cried and cried,” she said.

As of 2018, Thomas has a credit score of 805. With a few tips and tricks, you too can go from a low credit score to a near-perfect one.

Last updated: Sept. 28, 2020

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She Faced the Facts

After seeing her low credit score, Thomas knew she had to improve it because she was living with a roommate and wanted to buy a house of her own. She also knew that building better credit would help improve her overall financial well-being. “That’s where the journey started,” she said.

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She Educated Herself on Credit Scores

After Thomas wiped away her tears and got over the shock of her score, she wanted to find out why her score was so low. “I started researching like a madwoman to figure out what this meant,” she said. She looked up information on the internet and checked out books on the topic from the public library.

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She Disputed Errors on Her Credit Report

When Thomas printed out her credit report for the first time, it was 27 pages. She knew from her research that she needed to check for errors in her report because mistakes can potentially hurt your credit score. Thomas found a variety of inaccuracies, so she disputed the credit report errors with the credit bureaus to remove the incorrect information.

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She Recognized Her Biggest Credit Issues

Thomas knew that two big factors were really dragging down her credit score: the amount of debt she had and the fact that she hadn’t been making payments on that debt. At one point, she was 180 days late on her student loan payments. And she owed the hospital for treatment for her autoimmune disorder. “I had medical bills that were all levels of crazy — tens of thousands of dollars of medical bills, but I had no way of paying them,” Thomas said.

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She Reached Out to Her Lenders

Because she couldn’t afford her monthly debt payments, Thomas called her lenders to set up payment plans that fit within her budget. Her student loan lender actually thanked her for calling because they were glad she was trying to find a way to make payments. The conversation with the hospital billing department wasn’t as pleasant, but she was able to set up a two-year payment plan with interest.

Thomas said that although it can be terrifying to call companies you owe money to, you should communicate with them. “It will help you,” she said. “It will totally help you.”

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She Focused On Making Payments on Time

Negotiating payments that she could afford allowed Thomas to make on-time payments, which she knew would improve her score. To ensure that she didn’t pay late, Thomas wrote down the due dates of her bills each month and recorded every payment she made. When she couldn’t make on-time payments, she would call her lenders to ask if she could pay in a few days and not to report her payments as late.

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She Transferred Her Credit Card Balance to a Low-Interest Card

When Thomas started college in 1998, she signed up for a credit card on her first day of school but knew nothing about how to manage credit. So she racked up debt.

To pay off that credit card debt she still was carrying and boost her score, Thomas took advantage of a balance transfer offer from Capital One. She could transfer the $958 balance she had on her old card, pay 0% interest and qualify for a $300 credit limit once she paid off the transferred balance. It might not sound like a good deal, but it was for someone with a credit score in the 400s.

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She Paid More Than the Minimum

Thomas learned from her credit score research that she needed to make more than the minimum payments to pay off what she owed as fast as possible. Paying more than the minimum also can reduce the total amount of interest you pay over time.

Thomas was able to make more than the minimum payments on her debt by reducing her spending.

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She Reduced Her Spending With a Budget

In 2012, she tracked every dollar she spent that year in an Excel spreadsheet. It helped her realize how much money she was wasting. “I looked at that and started making changes,” she said. Not only did eliminating unnecessary expenses help her pay down debt, but also it helped her boost her savings. When she checked her credit score at the end of 2012, it was 740.

Actually, she found out her score was even higher — 760 — when she applied for a mortgage around that time. It was high enough for her to be approved for an FHA home loan with a 4% interest rate and a 3.5% down payment.

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She Topped the 800 Mark

As of 2018, Thomas had an exceptional credit score of 805. She’s been able to get it so high because she hasn’t had a late payment in eight years and keeps her credit utilization (the percentage of available credit she’s using) at 10% or lower. She also has a good mix of credit: a mortgage, car loan, student loans, two major credit cards and two retailer credit cards.

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She Continues To Check Her Credit Frequently

Now that she has her credit under control, she checks her credit score and report frequently. She also pays off the balance on her cards every month and now is using credit to rack up rewards points. “Last year, I had enough reward points to pay for almost all of my Christmas gifts and January birthday gifts, and I have enough airline miles from using my card to pay for my flights for my two vacations this year,” Thomas said.

Not only did Thomas survive her credit nightmare, but she teaches teens and young adults about money through her financial education program My Finances Matter.

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What You Should Know About Credit Scores

Thomas was hyperaware of her credit score and the impact that those three little numbers could have on her financial life, from her ability to qualify for credit cards to her interest rate on her mortgage. But how exactly is that score calculated, and what do those numbers really mean? Here’s everything you need to know about your own credit score.

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Credit Score Ranges

The credit scores most commonly used by lenders — FICO scores — generally range from 300 to 850. According to myFICO, anything below 580 is considered a poor credit score and signals to lenders that the borrower is a high risk. A good credit score ranges from 670 to 739; very good ranges from 740 to 799; and a score of 800 or higher is exceptional.

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What Credit Scores Are Based On

Credit scores are based on five categories of data in your credit report: payment history, amounts owed, length of credit history, credit mix and new credit. Each of the three main credit bureaus — Experian, Equifax and TransUnion — create credit reports on consumers based on information they receive from lenders and public records.

Your payment history — whether you’ve paid past credit accounts on time — accounts for 35% of your score, so keeping your accounts in good standing has a major impact on your rating. The amount you owe compared to the amount of credit you have available accounts for 30% of your score. Keeping your credit utilization ratio low will help keep your score high. The length of your credit history accounts for 15% of your credit score, your credit mix — which can include credit cards, loans and finance company accounts — makes up 10% of your score and opening new lines of credit accounts for 10% of your score. Try not to open too many new lines of credit in a short period of time — this makes you look like a risky borrower and can lower your score.

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Why You Might Have Different Credit Scores

The three credit bureaus might use different credit score models, such as VantageScore or FICO, to come up with your score, or they might use their own proprietary models. Because there are several ways your score could be calculated, you might have different scores at the same time. There also might be a difference if a lender only reports to one or two of the bureaus rather than all three.

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Things You Might Think Impact Your Credit Score but Don’t

There are a lot of elements that make up your credit score, but there are several aspects of your financial life that you might be surprised to find out have no effect on it.

One of the most common misconceptions is that checking your credit report can impact your score; however, inquiries made by you are considered “soft inquiries” and are not factored into your credit score. Other things that don’t affect your credit score include your salary, your net worth, your debit card activity, whether or not you receive welfare, if you’ve spent time in jail or if you’ve been late on paying your taxes. It also doesn’t help or hurt your score if you pay your rent and other bills like your cellphone on time, as this isn’t factored into your score either.

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All the Things You Might Need Good Credit For

Any time you apply for a loan, banks and lenders will look at your credit score. This includes car loans, mortgage loans and personal loans. Your credit score also is a factor when you apply for a credit card.

Not only will your credit score determine whether or not you get approved for a loan or line of credit, but it will also determine your interest rates. Those with good credit are considered less of a risk so they will usually qualify for lower interest rates than those with poor credit. You can also get approved faster and be approved for higher credit limits.

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How To Check Your Credit Score

There are now numerous options for checking your credit score free of charge. Discover offers free FICO score checks, even if you’re not a Discover cardmember. Chase also allows you to check your credit score for free when you enroll in Chase Credit Journey. Other ways to access your score for free include the Credit Karma website and the Mint app.

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Gabrielle Olya contributed to the reporting for this article.

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