Lisanne Vera found her dream house, then was surprised she couldn’t get a mortgage.
Elisabeth Nyang paid off a staggering $17,500 pile of debt so she could buy a home.
Melinda Smieja is a single mother whose daughter had a brain tumor. She struggled to make her house payments and faced losing her home — until she strategically turned it all around.
What do these three women have in common? In order to buy the best home possible, each of them put herself in position to get the best mortgage she possibly could. To do that, each took strategic steps to manage her own credit better, using a free credit monitoring service called Credit Sesame.
These women raised their credit scores by 175, 168 and 284 points, respectively — an average of more than 200 points. And just in time: Buying a home is one of the biggest financial moves any of us ever makes, and that’s when our credit ratings suddenly make a huge difference.
The better your credit, the sweeter deal you’ll get on a mortgage — and that adds up to a surprising pile of money over the life of a 30-year home loan. It could easily mean a difference of tens of thousands of dollars.
How to Take Control of Your Credit
To help you manage your credit, we recommend checking out the free credit monitoring through Credit Sesame. These three women used its tips and tools to overhaul their credit.
She Got Rejected for a Mortgage, Then Raised Her Score 175 Points
Lisanne Vera and her then-boyfriend were looking for a new house to rent when they fell in love with one that was for sale.
“It just felt like home,” she recalled. “We could see ourselves having a family there, staying there for the long haul.”
But that idea hit a brick wall when they applied for a mortgage. “We got a hard no immediately.”
They were stunned. What was wrong? To find out, Vera got a free “credit report card” from Credit Sesame. It broke down what was on her credit report in layman’s terms, how it affected her credit, and how she could address it.
She found three old unpaid medical bills. All three amounted to only $45, but they were hurting her credit. So she took care of them.
She had no credit cards — which she thought was a good thing. But that she meant she had no credit history, either. So Credit Sesame suggested a good credit card for her.
Over two years, her credit score rose from 527 to just over 700 — about a 175-point swing. She also married the boyfriend and they had a baby and bought a house.
And, by the way: “The house we ended up buying was way better than the house we were originally looking at,” said Vera, who lives in Ocala, Florida and works in online advertising for Codetic. “We were able to get approved for much more [of a mortgage].”
This Jetsetting Mom Paid off $17.5K in Debt in 16 Months
After two years of living overseas, Elisabeth Nyang was in debt to the tune of $17,500 — a mix of credit card debt, overdue bills and lingering student loans. It’s not like Nyang, a traveling speech therapist, intentionally collected the debt. It just kind of happened throughout the course of her moves between Vancouver, Washington, D.C., and Beijing.
Nyang fell behind on her payments when she lived in China, where it’s difficult to send money to the U.S. But when she decided to move back to the States, she knew she needed to get her finances back on track.
“I can’t live like that,” she remembers thinking. She researched the best credit-monitoring tools and landed on Credit Sesame’s glowing online reviews.
In only 16 months, Nyang paid off that $17,500 pile of debt. All the while, she kept tabs on her balances via Credit Sesame, where she could easily see which debts she owed to whom. She particularly likes its credit report card feature, which grades each factor that affects her credit score.
“I like how everything’s in layman’s terms,” she said. “It’s user-friendly, and it’s easy to understand.”
Now that Nyang has raised her credit score from 495 to 663 — that’s a 168-point jump — this world traveler told us her next big step would be moving from Alaska to Las Vegas, Nevada, where she planned to purchase a home.
Medical Crisis Leads to Credit Crisis
While her 13-year-old daughter was being treated for a brain tumor, Melinda Smieja applied to refinance her mortgage and the $1,200 monthly payment she was struggling to make.
When Smieja got denied because of poor credit, it really struck her how much of a hole she was in. How was she going to dig her way out?
Her financial problems had originally snowballed when her older daughter’s brain tumor was diagnosed. “So here I am a single mom, and my daughter gets sick,” she recalled. “And I’m like, ‘What am I gonna do?’”
Between continuing to care for her younger daughter and moving from Seabeck, Washington, to Seattle to be near her older daughter’s medical care, she racked up credit card debt on food and lodging. Her credit score dropped to 480, and she gathered somewhere between $20,000 and $30,000 in debt on 11 credit cards.
She says Credit Sesame made her overwhelming situation manageable so she could finally tackle her debts, one at a time. The work was slow and steady — but it paid off. Last time we checked, her credit score was up to 764.
More than a decade after her unsuccessful attempt to refinance her mortgage, she tried again and was approved by a company Credit Sesame recommended. With her interest rate cut from 6.5% to 4.1%, her monthly payment dropped to $675.
80,000 Reasons to Improve Your Credit Score
So, how much can a good credit score save you during the life of a 30-year loan? On a $250,000 mortgage, a 140-point difference could save you $83,770 in interest over the life of the loan, according to a Forbes calculation.
That 140-point jump might sound like a lot, but as these women have shown, it’s definitely possible — and could save you a ton of money.
Mike Brassfield ([email protected]) is a senior writer at Codetic. He knows too much about debt and mortgage based on personal experience.