1) My freshman year in college I was on reasonable budget from my parents and my grandfather, but as an 18-year old who has just tasted the freedom of college life, it just wasn't enough. Everywhere I turned there were booths in the quad offering one credit card or another...persuading students to sign up to get free t-shirts or whatever
worthless thing they were giving away. The credit limits were very low, but that was just enough to get a new dress for the sorority winter formal or buy a plane ticket to spring break. When I would max out these cards, I would just sign up for another one and not worry about the debt I was collecting. I wasn't completely naive! In the back of my mind I knew I would have to pay that back...I thought I would get a summer job to pay it and I never told my parents. It was like free money!
2) After college I moved to NYC, then LA then back to NYC. I never really needed my credit and because I had so many previous unpaid credit card balances I never even bothered trying to get new ones. In New York I didn't have a car and my parents had to cosign for my first apartment, so my credit was never an issue. The second time I moved to NYC I subleased my apartment and once again no credit was needed. Because I never needed to use my credit to buy a home or a car, I never thought about it. I also never wanted anything to tie me down to one city like a mortgage...I wanted to be free to move whenever I wanted!
Until one day I had to think about it! In 2006 I was working at the Rachael Ray Show in NYC and got a call in the office. I never got calls in the office so I knew it couldn't be good! It was a representative from the US Department of Education that wanted to talk to me about my defaulted student loan. WHOOPS! It had been 3 years since I graduated from college. I think I did the first loan deferral but after that I completely forgot about it. My parents had paid half of it back and the other half was up to me, that was our agreement the entire time. So at that point I owed somewhere around $25,000. What a way to ruin my day! He said they tracked me down and I would either have my wages garnished or set up a payment plan. I was barely squeaking by in NYC but obviously a payment plan made more sense. I paid on time for a consecutive 9 months to make it out of my delinquent status and they removed about $5,000 of late and interest charges. I have made a huge dent in it but I still have a long way to go. Luckily that is the biggest amount I owe and it is in a current and healthy status, which now helps my credit.
|I made this for my scrapbook...these pics were taken on that night! |
This is right before we had to get out of the cab and walk!
OK enough blabbing bout how I dug myself into this financial abyss...let's talk about my surprisingly great credit score!!!! Ok maybe not great but it is classified as a medium risk and fair score. I pulled all three reports online from freecreditreport.com and also ordered them by phone from annualcreditreport.com. My credit to debt ratio is 90% to 10% which is very good...the national average is 48% to 52%. I attempted one time to go to a credit consolidation agency around 2002 and I did pay on the college credit cards for about a year, but eventually that stopped. Those cards are listed on there now as closed with zero balance, even though I know I didn't pay them off. I guess it is true if you don't touch a debt for 7 years it is wiped off of your account? There are several other blemishes that I remember but it wasn't nearly as bad as I thought it would be. I am going to get those settled as soon as I can!
This is definitely a relief. Many people my age already own homes and cars, but that doesn't bother me. I am working in the right direction now to improve my score, and I am definitely learning and understanding how to be more financially responsible.