Tuesday, August 28, 2012

A credit crisis story

This could have also been titled "The time Amber thought she would not be able to finish her last two semesters of grad school."

This post has been sitting in my drafts list for well over a week. It is embarrassing to post, but what happened was a tremendous lesson for me and I feel the need to share it with others.

Here goes...

Tiny 18 year old Amber, a freshman at Iowa State University was beginning her first year in college and, like many other students, she did not have a job that first semester. For the first time in four years, a job was not a good idea while getting acclimated to college life.

She still needed money though!

What did she do, along with many other freshman, sophomores, juniors, seniors and beyond? She got a credit card, of course. Oh, and not just any credit card. It was a shiny red ISU card with the mascot on the front annnnnd, get this, it came with a FREE T-shirt! What a steal, right?!

What was the interest rate, you ask?


I don't know.

Yep, I still do not know. That card is long gone by now and I am still unaware of the rate on that card, and I think I am better off not knowing, because I'm pretty sure that $100 leather jacket I bought (and yes, I bought a leather coat. It was 2001, ooookay!) actually cost more like $150 after interest.

I did not do the best with managing money during my college years and directly after it. So bad in fact, that I swore off credit cards for FIVE years to pay them down and I actually followed through with that. I am so glad I did that, because during those five years I developed a very good habit. I do not absentmindedly use credit cards anymore.

It was a great lesson learned.

In the past month I have learned another lesson. Another extremely important lesson. Check your credit report. No, I mean REALLY check it. For years, I would log in once, maybe twice a year. Check my credit score. Feel pleased that it was good, call it a day and move on.

Well, that bit me in the butt HARD.

While in DC earlier this month, I got a phone call from the financial aid office at my university. I didn't call them back for awhile, because I figured I just forgot to sign something. I looked at my University account online and everything seemed normal, so I went on with vacation. While trekking through Virginia (ok, not trekking - maybe just sweating?) I got the sudden urge, or need, to call them back in between our destinations. The guy that answered calmly told me my loans have been denied.

I think my blood ran cold and I whispered, "whaaat?" He said he did not know why, but gave me a number to call to find out. I was pretty speechless at this point and on the verge of faahh-reaking out.

I immediately call the number and the loan agency tells me there is something in collections on my credit report. I immediately start arguing! Collections??! That is absurd! I have not received a letter! I have not received a phone call! I have not received ANYTHING and I immediately go into defense mode and searching for answers. My first and last name is extremely common, there are THIRTEEN other people at my university with my name for crying out loud, so the only logical answer was that I was being mixed up with someone else.

When we get home (well, back to Becky's apartment in Virginia), I immediately pull up my credit report and.... lo and behold, there IS something in collections. A cable bill from the end of 2006. Here is that "D'oh!" moment.

Sigh. Who. Does. That?! I actually have a very logical explanation. Read on...

So, what was I doing in 2006 you ask?? Well, I was moving from Kansas City back to Des Moines, where I lived with my parents for a bit, working for the CLL in my hometown before I made the cross country move to Myrtle Beach. Three different addresses within six months. Three different states. A cross country move. It. Was. Hectic.

That is my excuse.

Credit bureaus do not give a shit though. I mean, why would they? It is pretty black and white. I cannot say I blame them.

What gets me is the collection agency had my parents address (which they still reside at) and my current phone number (which hasn't changed in over a decade). My parent have not received a letter in six years, and I have not received any phone calls.

I did not argue though. I quickly took care of the account. Athough in TWO MONTHS it would have dropped off my credit, but that thought makes me feel guilty. This is MY bill and I need to pay it. So, I paid it. Then contacted the loan agency. They said I could file an appeal. Which, I did.

Then... the appeal officer I was assigned (who was phenomenal) said there is ANOTHER account in collections.

Are you thinking WTF? yet?! Because, I was! I am combing my report and there is NOTHING else negative. Where is she getting this?? She told me they only use Equifax, and I was looking at TransUnion and Experian.

Good lord.

Fine, so I log in, get my Experian report and lo and behold they do have an account listed in collections, but it is FALSE. That account is NOT in collections. That account was closed in 2009 and was never in collections!

By this point I am cussing, pissed off, scared, trying to think of contingency plans if I cannot attend school this semester (thank god I can always sub!). Then realized, that would be giving up! I'm not giving up. If worse comes to worse I could get a co-signer for my loans. But.... I don't need a co-signer. I just needed to do the legwork to get this off my credit.

I am kicking myself. Kicking myself HARD. Why didn't I check this? Why didn't I know that this was on my report tarnishing my credit history? Credit history that I had worked so hard to make better! It seems so silly. It IS silly! Who gets on and just looks at their score and goes about their merry day? Apparently I do.

It is what it is and I cannot change my actions, I can however make them better in the future and I have learned a valuable lesson. I will go through my credit report each year with a fine toothed comb and carefully analyze everything. Mistakes can and do happen. Mistakes that can cost you a better interest rate or in my case, your student loans.

This story does have a happy ending though. My appeal was approved and everything is back on track for my last two semesters of grad school. At this time next year I should be a fully licensed teacher with my own classroom. Everything is as it should be, I did not need a co-signer and I will not be set a year behind because of a cable bill in 2006 that I forgot about. Thank goodness.

Classes started yesterday and I love my schedule (for the most part) and am so excited to be back on campus and seeing familiar faces. I am sure I will post about the classes I am taking later this week!

Do you check your report regularly? Have you ever had a mistake on your credit report?


pinkflipflops said...

I have never checked mine. I think my husband does.

pinkflipflops said...

I know for SURE he checks his own.

whit said...

Ack! I have never checked mine! The one time I had a Victoria's Secret redit card was my freshman year in college and I thought I paid it online no problem...and then I got a call saying I did not in fact pay it. I fixed it immediately, but NO more credit cards for me. I'm sure my credit it terrible and I really should look into it. :P

Kristyn said...

I was like you in college. I would get credit cards and pay them, but you never really know. When I was going to buy my house was the first time I really looked at my credit report. I have looked at my credit scores long before, but I never really looked at my credit report. Now I make it a yearly thing (since you get a free look every year) to make sure everything is still looking good. It's scary to get a call from a credit company or a collections agency. Not fun!

It's also scary to know that the 3 bureaus could report different things. I knew they reported different scores, but to have different things on your credit reports is crazy. I will be checking into that!

Amber said...

Eeeps! That's definitely scary, I'm glad it was all taken care of!! I had something similar happen with Home Depot. We have a Home Depot card from when we first bought our house but always would pay it off regularly (and barely used it anyways). Anywayyyy we bought a bunch of stuff for our deck this spring and I tallied up the receipts and paid it off. Except I missed one receipt and I NEVER got a statement in the mail! 2 months later I got a call from collections. I paid it off right away of course because they had the wrong mailing address and that's why I never got a statement. Still scary though!

Glad you got everything sorted out!!

Stephany said...

Okay, so this post made me go and actually get my credit report! I've never done it, been too scared to look at it, so I just went and got my free one and I've been combing through it. This is a great PSA because I think so many of us either are too afraid to look at it... or don't think it'll affect us too much so we forget about checking it!

I'm glad you got everything squared away with your collections stuff!

Kara said...

I have never checked my credit score myself. I don't know if it's the same down in the States, but up here your score takes a wee hit everytime it's checked. I do know that I have really good credit for someone my age, according to my bank people and mortgage broker, so that's pretty awesome. I have no idea what the number actually is though!

tammyroney said...

I never check my score. It has not ever crossed my mind! I will now tho! Good luck with classes! I too am in school and it is so hectic!

Kelly (She Wears a Red Sox Cap) said...

Oh man, that's crazy! I never check my score but I really only use 1 card and I've never not paid in full so I thought I didn't really have to worry about it. But then again, I pay cable bills so I should look into that! I wonder why your cable bill situation didn't pop up the other semesters before this since it was from 2006. Annoying.

Lisa from Lisa's Yarns said...

Oh wow, what a mess. :( I haven't checked mine for awhile, but I did pull it once a year after college. I used it to close out all the credit cards I signed up for (and never used) in college.

Luckily I have an extremely rare name. There are only 2 of me in the US and the other one is married so doesn't use my last name anymore. So there is very little chance of something being misreported. But it is still a good idea to pull your credit once a year just to make sure there isn't anything whacky out there!

Becky said...

All in all, I think you handled it really well! We all make mistakes in our early twenties - and like you said, this is a great reminder for people to check their credit reports (and scores) to make sure everything matches the way it should!

Marisa A. said...

Yikes, I am sorry that was probably beyond scary stressful. I too managed my money poorly in college and after and am STILL paying for it. Literally. Now looking back I can't believe I was so naive and dumb about credit cards and money. I sitll kick myself for it.

Kyria @ Travel Spot said...

I am glad you posted this. I think we probably all had a high interest credit card during our college years! I check my score once a year, but I didn't always. When I was in school, I had loans that were deferred until 6 months (or something) after I finished. Well, silly me decided to take a year off from college and I didn't even thing about the loans. I had the same thing happen where I tried to get a CC and was declined so I pulled up my report and luckily the bill wasn't in collections, but it was over 90 days past due. Doh! Since then, I have checked my report every year. Even if you are very financially responsible, they still make mistakes. And that can be detrimental if you want to buy a house, a car (or get a student loan) or even rent an apartment in some places!

Donna said...

I had something similar happen, where a very small medical bill went to collection without my knowledge. I called the company and they told me I should have known I owed them money even though they never sent me a bill! It's all so strange.

Crazy Shenanigans-JMO said...

How scary! Wow! I'm so glad that you got it fixed and were able to make sure your loans stay on track. That's amazing about your credit cards and not using them for so long. I'm trying not to use mine right now at all.

Shoshanah said...

The only time I've ever looked at my credit report is when we bought our house. There was nothing wrong on it, but one of my parent's credit cards was on it. Back in high school my parents put me on their gas card to use when I filled up my car. I hadn't used that card in years, and that gas station wasn't even in Louisiana. But my parents were able to take me off the account and have it removed from my report. It was someone of a pain, but I realize it could have been a lot worse.

Cinthia Mull said...

Aw, don’t be embarrassed, Amber! Everything happened for a reason. In your case, what happened teach you a valuable lesson about finances. With that experience, you will know how to manage and handle your money better. And I’m glad that everything ended in a happy note! [Cinthia Mull]