Who would have ever thought ‘Credit’ and ‘Gardening’ would have anything in common ?. However, this little strategy took me from the low 700s to the low 800s in a little over a year! This was after having judgements, foreclosures, and a bankruptcy on my credit scores!
What Is Credit Gardening?
‘Credit gardening’ is when you refrain from applying for any new credit, while properly managing your existing credit accounts. This means no hard inquiries and no new accounts appearing on your credit for 6 months or longer. I personally did not apply for anything for 2 years, and didn’t need to.
Here’s how to get started…
Plant the Right Seeds
You should first have good, solid credit cards so if someone asked you “What’s in your wallet?”, you would proudly tell them. If your answer is “Credit One” or “First Premier”, a store card, or a secured card, then you are not ready for a 6mth or longer gardening period yet.
To clarify, when I was rebuilding after filing for bankruptcy, I would do short gardening stages of about 3-4 months; and add on a better-quality card after that time period has passed.
Those who have accomplished the perfect 850 credit score, however, go 4 or more years without obtaining any hard inquiries or new accounts to their credit profile; see the difference? So, for this article, we will address the longer gardening stage that will catapult you into the next credit score range. The cards that you want to plant to achieve this goal are quality, prime credit accounts with decent interest rates, low-zero annual fees and no monthly fees what-so-ever.
You will not need a lot of credit cards in order to accomplish this, 2-3 are enough. It would be great if you had an installment loan reporting as well (auto loan, student loan, mortgage loan, etc.), so that you can have a Credit Mix. Credit Mix accounts for up to 10% of your credit scores, this may not should like much but when you’re at a 757 credit score, for example, and wondering why you’re stuck there, the extra few points in this category can definitely help! So, mix it up ?.
Tend to Your Garden
Once you have planted the right credit accounts, you will tend to them often so that your credit scores can blossom and grow. This means ensuring that all of your open and active accounts are:
- Paid on time, every time,
- Paid in full – Leaving balances over to the next billing cycle does nothing more than accumulate debt, and that is not the goal,
- Utilization is kept low – This means not exceeding more than 10% of your approved Credit Limit.
You also want to ensure that you:
- Remove any weeds – this means that you are reviewing your credit reports for negative items and disputing any errors – no matter how small – for their removal or update so that they can report more positively.
- Create and Follow a Budget to ensure that you are making positive financial changes that allows you to direct the finances coming into your household each month, and not relying on credit as an extension of your income each month.
- Plan Ahead – during the gardening phase, many forget about other actions that can result in a hard pull, such as moving, cutting on utilities, switching cell phone companies, getting cable or satellite services, and more. So, planning ahead of time – before entering into the gardening phase (if possible) is preferred.
Keep Your Garden Healthy
Soaring your credit scores is definitely one of the most exciting things about the gardening phase. I mean, after months of adding on accounts, disputing, and arranging payment dates to fit into your monthly budget; to have your hard work finally pay off by doing nothing more than practicing good financial habits is amazing! Now, its time to keep your credit harden healthy!
You’ll accomplish this by maintaining your good habits and protecting what you have grown.
This means you will keep a good credit monitoring service so that you can review your credit reports often for any suspicious activities. You will not allow any spending temptations to increase your debts and your credit utilization, thereby ruining everything you have built. You will continue to maintain and follow a monthly budget so that late payments don’t hit your credit reports ever!, And, you will consider obtaining Identity Protection Service, such as LifeLock, to further protect yourself from company breaches that you do not have any control over..
And, You’ll Get Support! If you want to connect with other “gardeners” to get ideas and stay motivated, my Credit on Fire Academy is perfect for you! My students are actively working on using their creating wealth versus looking at the newest shiny object to buy. Because, – when leveraged properly – Credit Builds Wealth, and that’s my ultimate goals for all of you!
Hope this Helps!
Your Partner in Prosperity,