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Building credit, cutting debt

The story of how one schoolteacher paid off student loans.

Building credit, cutting debt-Bobby HoytPost-college life gets crazy faster than you can imagine, and managing your debt load and building credit can easily fall by the wayside as you search for a job, start paying on student loans, find a place to live, and get out into the real world. The thing is, when it comes time to rent a place, apply for employment, or buy a car, a high credit score can be your best friend.

Bobby Hoyt graduated from college with a little under $40,000 of student loan debt and had no idea what his credit score was. But this former high school music teacher from Plainwood, Texas, made some smart and sensible moves to pay down debt and boost his credit rating at the same time. Hoyt, 26, shares how he did it.

“I’m really cheap”

If there is anyone out there that understands how much of a struggle your finances can be during the post-college part of your life, it’s me. I was a high school band director, and I lived on a teacher’s salary. Somehow, I actually managed to pay off my student loans in less than two years.

There really isn’t any secret of how I was able to pull it off other than this: I’m really cheap. I drove the same car I had in college, I made the biggest payments I could toward my student loans, I didn’t buy new shoes or clothes like everyone else around me, and I found the cheapest place to live that I possibly could.

Other than being debt-free, I saw an added benefit by paying off my loans the way I did. Within two years of working a full-time job, paying down debt combined with other moves, like making my payments on time, helped me pull a 790 credit score (I was just as shocked as you are).

Building credit, cutting debt-What makes up your credit score

Get the free credit reports

Online companies make it unbelievably simple to look at your credit report. Annual Credit Report is a reputable and free choice.

I regularly started checking my credit report after college, and saw how making my loan payments on time was moving my score up. I also learned about the different types of credit that lenders take into account, like revolving credit and installment loans. It was helpful to see how my credit picture was laid out for lenders.

Start paying on your student loans sooner than you have to

This advice is something that I actually didn’t know until after graduation, but I wish I had. The first thing you’ll find out about your student loans is that there is a “grace period” that allows you to delay your loan payments for up to six months after college. However, if you can, making payments right away allows you to cut back on the amount of interest that accrues on your loans. The grace period sounds awesome, but interest is accruing while you aren’t making any payments. For me personally, if I had realized this sooner, I could have saved myself a substantial amount in interest charges just by making small payments right away.


The main goal is to see building your credit score and managing your student loans as a marathon instead of a sprint.


Get a credit card, but be careful

I was really scared of credit cards after college. I actually applied for an airline rewards card and got denied. That was definitely an awful feeling, but I tried again with a company my parents had been using for almost 30 years and I was accepted. Once I got the card, I was able to boost my credit score by showing lenders I could handle revolving credit.

Another strategy is to apply for a secured credit card. This type of card requires you put down a cash collateral deposit that becomes the credit line for that account. So if you put $500 in the account, you can charge up to $500. This is one of the easiest ways to get a decent interest rate, and even people without great credit can get approved.

Use your secured credit card for your daily purchases, but never spend more on the card than you actually have as collateral. You’ll still make your monthly payments and try to pay more than the minimum. This strategy will help you build a stronger credit score, and it’s great practice for learning basic money management skills. Read more detailed strategies about the basics of building credit.

Building credit, cutting debt - keys to good credit

Don’t spend more on a car than you can afford

This one is pretty self-explanatory, but it’s also an easy mistake to make. Drive the same car you had while you were in school, or buy a quality used car if you didn’t have a car as a student. This will save you a ton on payments and interest that you can apply toward your student loans instead. Buy the nice shiny car when you’re older and your income is higher.

Consider refinancing your student loans

This is another one of those things I wish I had done after I landed my first job. I was making huge loan payments every month, but my interest rate was 6.8%. If I could go back, I would have tried to consolidate or refinance to get a better rate. Even a point or two can put thousands of dollars back in your pocket over the life of the loan.

Ultimately, the main goal is to see your credit score and student loan management as a marathon instead of a sprint. Take some time and educate yourself before you land your first job, and don’t overextend yourself by financing any more than you need to. Good personal finance habits in the beginning can make the “real world” much less stressful after college.

Making some home improvements? Buying a car? Funding your education? Explore ways to get smarter about your credit and debt. Visit our Smarter Credit Center for more information. Wells Fargo customers can answer a few questions to create your own My Credit Options Guide.

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