Not to long ago, I went from very poor to very good credit in 45 days. My wife and I were under crushing financial debt. I mean we still are, but the payments at the time far exceeded what we were actually able to handle. I had a pay cut from work a few months earlier, which we had not recovered from. We were behind payments, our credit scores were both shot and my wife was on maternity leave. We were definitely not in a good place. To handle payments we were using our savings. Savings which, by this time were nearly exhausted. We were considering some pretty serious options, like declaring bankruptcy.
Then Came an Angel
No, not really, but a friend of ours told us about a financial trick he knew about. A trick to open a bunch of 0% interest credit cards and reset your credit score in 4 – 6 weeks. “Even better…” he said, between my wife and I, we could keep our debt on 0% cards in perpetuity. Sound to good to be true? Let me tell you about a hack so outrageous, so ridiculous, so crazy, that I can not in good conscience actually recommend you do this. But I did it, and it worked. Here’s the true story…
Disclaimer: What you are about to read should not be taken as financial advice. In fact, it is a perfect example of something you should not do. What I am about to describe is the way I quickly achieved a solution to a big problem I had. However, this solution is extremely high risk. I can not in any capacity recommend anyone actually do what I will be describing below. Unless you are in the most dire of financial situations, even then, do not do this! I am not a financial advisor. Anything I say and or write regarding finances should not be construed as professional or expert financial knowledge. You have been warned.
So the first thing my wife and I did was find a friend, a very, very good friend. One who was not only an extremely good friend but one who was also willing to basically take on all of our debt for about two months, and who had excellent credit. Let me tell you, you’ll find out who your true ‘lifer’ friends are if you have one that will agree to this.
After getting our friends agreement for this, she (and her husband) needed to open as many long term 0% offer credit cards as they could. (See the Difference between a Hard and Soft Credit Check for more information on how this can affect your score.) Then, after receiving them, combining as many as they could onto one card. So for example, for 3 different Chase cards at 10k each, they would now call Chase and ask to combine all the cards into one so that they have one card with a 30k limit. This was not necessary but just made it easier to track everything.
With the cards open and received, we then worked with our friend to do balance transfers of all of the debt onto her 0% cards. The purpose of this step was to clear all debt from our records. The only things remaining on our end was our house mortgage, car loan and a small amount on a personal line of credit. Then from there we just waited.
The Waiting Game
An interesting piece of information about the credit reporting bureau’s (Equifax, TransUnion, and Experian) is that they generally update right when a request to pull your credit is made. Another interesting tidbit, is that credit card companies generally report changes to status once a month. (Read this article from Nerdwallet for more details.) Depending on when in the month the credit card company reports to the agency, it’s possible to see a credit change in as little as 1 week, and a maximum of 6 weeks. So, we waited. I do want to point out that during this waiting period, we had already made agreements with our friend to cover any credit card bills that came in while the debt was in her name. And so we did.
The Return Transfer
If I remember correctly it took us just about 4 weeks before the score changed. And WOW did it change! From a Very Poor to Very Good credit rating in only 4 weeks! It felt like magic! Of course it wasn’t magic, if anything it was deception… but I digress. From here the plan was simple, make sure that moving forward, we could keep all the debt at 0% interest until it was paid. The reason we needed a friend to offset our debt was so that both of us could ‘reset’ our credit scores.
With our credit scores reset, my wife just duplicated what our friend did. She opened up as many 0% cards as possible, consolidated them and then transferred the debt back over from our friend to only her. This point was important. This plan wouldn’t work if we split the debt between us. Why? Because one of us has to maintain excellent credit, so that when the time comes and those 0% start to expire, we can simply transfer the debt over to me. In this way, switching off every year and a half or so, we can keep the debt on 0% cards in perpetuity.
What to Beware of
Where do I even begin. There are so many potential risks to this strategy that it’s why I could never actually recommend it to anyone.
First, beware that most banks do charge a transfer fee. When we went through this process we not only looked for long term 0% offers, but also for nothing greater than a 1% transfer fee. The way this works is the bank charges 1% of the total being transferred over as the ‘fee’ of doing so.
If you are transferring 30k, the bank would charge $30,000 * 0.01 = $300. This amount is usually added on top of the amount transferred over, not as a separate bill. Keep in mind, however, that this is up to the bank! When my wife and I did this we made sure not to apply for anything with more than a 1% fee.
Second, if you do this with a significant other, the person who’s debt is not in their name must maintain good credit. Not doing so will put you right back in the same situation of needing a friend. Don’t treat your friends so poorly!
Third, remember that banks can change the rules of the game at any time! This works right now because interest rates, the economy etc. are going in such a way that some banks don’t mind extending large amounts of credit, that they don’t mind having a lot of long term 0% offers on the market etc. It’s important to remember however that this could change at any moment.
Lastly, Remember that banks have the right to collect on all outstanding debt at any time! It’s their money after all and if they want it back, there is little to nothing you could do about it except pay.
Why We Did This
At the time my wife and I did this, we were paying an absurd amount of money in interest. The amount we were paying in interest far exceeded what we could actually afford. Even including the 1% transfer fees we needed to pay on all the debt we were moving (both ways,) those fees combined were still less than the interest we were paying in a month. Now that it is done, we have all our debt on 0% cards, which means every payment is pure principle. In addition, the payments are now within a budget-able amount, instead of in excess of what we bring in every month.
This is how I got excellent credit in 45 days. I will point out and stress, however, that having excellent credit does not mean “good with money.” If you are reading this thinking any part of this sounds like something you should do. Or worse, if you fee like it is something you “need” to do. Then the first thing you really need to do is learn how to properly deal with and handle money. My true story here is not an example of how to do so, quite the opposite. I recommend starting here.