Staff Sgt. Christopher Weiss had a great credit history when he left the Air Force in 2006.
But within two years, by the time he decided to return to the military and join the Air National Guard, he'd blown it racking up about $10,000 in debt, including maxing out 12 credit cards.
"It didn't hit me completely until I had my truck repossessed," he said. "I only had about $3,000 left on the loan."
That was in late 2008, just a few months before he joined the National Guard in March 2009.
Just 16 months later, Weiss, who is working full time at Langley Air Force Base, Va., has not only paid off that $10,000 debt, but also saved another $5,000, putting away between $500 and $1,000 a month.
And yet, his credit score is still a less-than-stellar 609.
Weiss, who is 30 and single, wanted to know how to improve his credit score and his overall financial situation as steppingstones to buying a house using his Veterans Affairs Department loan benefit.
Weiss has made a monumental start on his own, said Sean Hannon, a personal financial consultant for the Virginia Joint Family Support Assistance Program, through which service members and their families can get free, confidential financial counseling.
Hannon recently sat down with Weiss to go over his credit history and offer some advice on the next steps to take.
"The lesson for people with a great credit history is that it doesn't take long to wipe it out," Hannon said. And a damaged credit score is not rebuilt overnight.
Where he went wrong
Weiss' problems started when he separated from the military after eight years of service.
"I thought I had it figured out," he said. "I'd go to school using the GI Bill and work part-time. I sold off my ‘toys' Jet Skis, a motorcycle, an extra car. I tried to cut as many extra expenses as I could, but I still wanted to live the same lifestyle, hanging out with friends, traveling. I started paying for things I couldn't afford."
The few thousand dollars he had saved didn't last long.
"I was living off credit cards for a while, spiraling down."
He was going to school and working toward a degree in mechanical engineering, but had to miss a couple of semesters to work. His part-time income as a seasonal bartender in Florida wasn't steady, and he didn't earn much in the winter.
During that time, Weiss bought a $1,000 computer with a one-year, interest-free loan. But he didn't pay it off in that year, and interest charges for the year were tacked on to the cost. By the time he paid it off, that computer had cost about $2,000 with interest and other fees.
And though his 12 credit cards generally had balances of only about $500 or so, that debt began to snowball, with some accounts turned over to collection agencies underscoring the hard lesson that even small balances can add up and get you in trouble, Hannon said.
After Weiss had his truck repossessed in late 2008, he decided he'd had enough financial turmoil.
How he dug out
"I took a timeout, thought about the problem, made a plan of action and did it," Weiss said.
He checked into credit repair companies, but quickly decided that the money they charged was not worth it, especially because they couldn't do anything for him that he couldn't do himself.
Weiss got caught up on his truck payments and paid off his loan. He contacted credit card companies, and some agreed that as long as he continued to make specified payments, they wouldn't charge him interest for a certain period, such as six months.
He paid off cards that had been turned over to collection agencies and paid off and closed other cards himself.
Some credit cards were "charged off," which means the bank determined it was not going to collect the money. That's a big negative on credit reports, Hannon said and those black marks will stay on the reports for about seven years.
But it helps that Weiss paid them off eventually.
Another big negative is the number of "hard credit inquiries" applications for new credit.
Weiss has had six inquiries since September 2008. "That puts you at the upper limit of where you want to be," Hannon said. "It's not negative until you have too many of them."
Those inquiries appear on credit reports every time a creditor checks them and not just for credit cards, but for things such as mobile phone service, for example. And they stay on the credit reports for two years, Hannon said.
Still, he told Weiss that he had done a lot of things right that will help him raise his credit score.
"You didn't use cash advances on your credit cards. You contacted [credit card companies] directly, and you followed through on your contracts with them," Hannon said.
Not that it was easy. Weiss said he made countless phone calls to credit card companies and collection agencies, often just tracking down the right person to talk to.
By April, he had paid off $8,000, and the remaining $2,000 was a single debt. He tried for two months to figure out how to get the collection agency to accept his payment.
"It was a nightmare. I couldn't talk to anyone who knew what was going on," he said.
He finally was able to pay it off earlier this summer.
A new outlook
After making payments to get his truck back, Weiss has paid off the loan balance. And while he put his college degree on hold for a while, he's planning to start courses again in the fall.
"My guess is that six months from now ... the credit score could be around 650," Hannon told Weiss.
When Weiss was at his low point, he said, "It stressed me out. Littler things bugged me more often when I was in a lot of debt. And when my truck got repossessed, that caused even more problems.
"I didn't like not being able to feel financially secure, having all these issues and problems."
Now, however, he's on a roll.
"It feels good," he said.
Your score: What it means
Your credit score is the number that helps lenders decide whether to give you a loan and at what interest rate. Scores range from 300 to 850.
Other businesses may use the credit score to determine your payments, such as insurance companies.
Credit scores take information from credit reporting agencies, so it's important to ensure your credit reports are accurate. Free reports are available once a year from each of the three national credit reporting agencies at www.annualcreditreport.com. You can get all three at once, or space them out periodically to check for changes.
There are some things you can't control when trying to improve your credit score. Length of credit history accounts for about 15 percent of a score. According to FICO, previously known as Fair Isaac Corp., the credit score weighs payment history, the amount of money you owe, how long you've had the credit, and collections and bankruptcies, among other factors. The most weight, about 35 percent, is given to payment history, so paying on time is critical. The amount you owe in revolving debt accounts for about 30 percent.
For more information, visit www.myfico.com and click on "Education."
Good credit: How to make it happen