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One of the most valuable learning experiences of my college career isn't reflected on my transcripts. I did receive a grade, well... a score, and I received monthly progress reports called statements. It's hard to set foot on a college campus without being bombarded by credit card applications, and I honestly think I applied for them all. In my freshman year of college alone, I dug myself into a bad credit hole and it took me the remaining three years to climb back out.
When it came to managing money, particularly credit cards, I will be the first to admit that at 18 years old I was both ridiculously dumb and shockingly naive. In addition to going to school, I worked nearly full-time at a retail chain making little better than minimum wage. I was paying all of my own expenses, and was living on my own for the first time at 18. Out of ignorance, I used credit cards to pay for books, groceries, and other purchases, when I should have taken out a low-interest student loan.
By the end of my freshman year I had four credit cards, with interest rates ranging from 18-23%. I had accrued about $6,000 in debt, which for an 18-year-old making minimum wage seemed like an enormous sum. I also had two store charge cards, also with interest rates around 20%, each with $300 limits. I immediately got in over my head. I managed my credit horribly, and accrued unnecessary charges; I was paying so much in minimum payments and fees that I couldn't ever get ahead or quit using the cards, or I'd have no money for gas and food. I'd fallen into a vicious cycle that I knew I needed to break.
By the time summer vacation rolled around, my friends were headed to Cancun, while I was headed toward bankruptcy. With the credit card companies calling me every day, I knew things had to change if I was going to make it on my own. I organized all my bills and took stock of my situation, including pulling up my credit report. My score was 527. On the chart, I was in the red part that said "poor." I took on a second job for the summer and started micromanaging every cent I earned - and spent. There were some weeks when I lived off peanut butter sandwiches, but by the end of the summer I had paid off and closed the two store charge cards and had brought all four credit accounts up to date.
I estimate that I paid an extra $4,000 in interest, on top of the $6,000 I charged, by the time I earned my degree. I had continued to consolidate and pay off my cards, not prioritizing by interest rate (though they were all horrible and relatively similar), but by lowest balance, which let me pay off individual cards more quickly and use the payment money toward another card. By the time I graduated I had only one card left, and though I probably still owed around $3,000, I stayed on top of payments and paid it off within about a year (I actually paid that one off by using it more!). Through the process I watched my credit score slowly creep higher, and about a year after my graduation it was at 698 when I got a new job and financed a car.
Looking back on my college years, I'm actually proud of what I did. I made mistakes and learned a hard lesson, but I'm happy that it happened sooner rather than later. To this day, no one other than me has ever made a payment on a credit card in my name; I got myself into a mess, but I also got myself out of it in the end. I would not trade what I know and experienced for the world, and for better or worse, the mistakes I made at 18 have taught me to be responsible today.
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