Tom’s Story – Part 1
Tom is a successful small business owner. He owns his vehicle, runs a profitable business, and hasn’t carried debt in years. He’s proud of the life he’s built—he lives within his means and uses cash for most purchases.
In his early 20s, Tom had a few rough patches with credit. After a couple of missed payments and a lingering collection, he decided credit wasn’t worth the stress. From that point forward, Tom decided to live what he called a “credit-free” life.
And for a while, it worked. He kept one credit card with a $500 limit for emergencies, and he paid it off every month.
But when Tom applied for a mortgage, the answer surprised him: his credit score was not strong enough.
He hadn’t missed any payments. He hadn’t taken on new debt. In fact, he hadn’t done anything wrong. But here’s the truth:
Doing nothing with your credit is not the same as using it well.
Tom had one active trade line—a single credit card with a low limit. It was paid on time because he used most of it each month; the system saw that as “high risk.” The fact that Tom hadn’t built any depth, without a second card, no installment loans, and with no credit diversity, meant that his responsible lifestyle wasn’t enough to open the doors he needed.
Why This Matters for You
If you’re someone who’s stayed away from credit, either because of past mistakes or a personal commitment to avoid debt, you’re not alone. But building strong credit isn’t about taking on more than you need—it’s about showing that you can access credit, use it wisely, and pay it down consistently.
Here’s what the credit system values:
- Two or more active credit cards
- A history of on-time payments for a minimum of 24 months
- Low balances with high limits (keep under 50%)
- A mix of credit types (like a card, line of credit, or a loan)
You don’t need to go into debt to build credit. But you do need to show the system you know how to use what’s available to you.
Your Credit Action This Month:
Start where Tom started—with awareness.
To-Do List:
- Write down every credit card you currently have and its limit
- Check your balance and usage from the last few months
- If you’re always using more than 50% of your limit, try to spend less, increase the limit, or pay it down before the statement date
- If you only have one credit card, try applying for another credit card
This month is about understanding where your credit story begins.
Next month, we’ll follow Tom again—this time, when a tiny $10 oversight nearly derailed everything. It’s a reminder that even small details matter.
You’re off to a strong start.
