I remember the first credit decision I ever made — and the consequences. I was 18 years old and working in Manhattan. I went to my financial institution to deposit my paycheck, and while I was there I was offered an application for a credit card.
I was so excited that I didn’t even think about reading the information in the packet — I had no idea what I was signing up for. Of course, I probably should have consulted with my parents about it first, but I didn’t. I was approved for a card not long after I filled out the application.
It Felt Like Free Money
Once I received the card, I went on a spending spree. I never gave thought to the fact that I was going to have to pay back my debt. All I was thinking about was that someone had given me what felt like free money. Some may say I should have known better, especially with all of the guidance I had received from my parents growing up, but paying it all back was the furthest thing from my mind.
The day came when I received my first bill, and guess what I did? I made another bad decision and ignored it. I just put it in a drawer and never thought about it again. I continued using the card, and I eventually reached my limit.
Just when I thought my “free money” days were over, I received another letter in the mail saying that I was preapproved for another card. I quickly called in and was approved. In no time, I began unwisely spending again and reached the limit on the new card as well.
Going to Collections
The collections calls soon began. They were truly eye-opening for someone who thought they had a lot of real-world experience. Each time I answered the phone, someone told me that if I didn’t pay, I could be prosecuted or I could put my family in danger of having to pay off my debts. At the time, I had not yet talked to my parents about the trouble I had gotten myself into, so I panicked.
Not once did the collections representatives offer me a way to fix the issue. Instead, I kept receiving threats about the consequences of my actions. In one conversation, I was even told that I would never be able to purchase a car or home and would be stuck living at my parents’ home for the rest of my life.
By the time I finally began to make a plan of action, the accounts were almost ready to charge off. I was working and had no reason to not pay the bills, but I was immature and didn’t understand the damage I was doing to my credit.
After I finally told my father what was going on, he explained that I needed to make the payments I owed on these accounts. He helped me create a budget in order to pay off both cards. The only problem was I had already hurt my credit with delinquency, plus I was only 18 and had no other revolving credit. Therefore, it was not easy to rehabilitate the damage I had done.
This was one of my biggest life lessons. It took me a couple of years to feel confident enough to apply for credit again. I always had memories of those threatening calls sitting in the back of my mind.
A New Job Brings New Knowledge
What finally did help me break out of that fear was working for a credit card company. The opportunity came along when a friend of mine told me about the job. We had spoken about the importance of understanding credit, and he recommended that I apply because working there would teach me the importance of taking care of my credit and how to be responsible. He was absolutely right.
What I Learned About Credit
I quickly learned that building good credit is not just about making sure your payments are on time in order to avoid late fees and interest charges. It’s also important not to max out your credit lines. Ideally, you should only use one-third of your total credit limit.
Although the information I learned mostly pertained to credit cards, it still helped me understand more generally how to use credit responsibility. I realized that by following these same guidelines, I could boost my credit score and get better rates on secured loans such as an auto loan or mortgage.
Finding a Better Way
The one thing that still did not sit well with me was the way that the collections departments handled their calls. I believed that there had to be a better way to work with the cardholders and not have to make them fear horrible consequences. While I did not agree with the collection tactics that were being used, the employees I dealt with were following their department’s philosophy.
Eventually, I ended up working in a collections department for a bank, which gave me firsthand experience with cardholders. Unfortunately, there were some situations where I was powerless to assist a cardholder the way I wanted to. To make things worse, I could relate to some of the issues they were going through, but I was unable to help them find solutions to their problems.
VyStar’s Credit Philosophy
Some may call it fate or luck, but I started working in the VyStar collections department after I moved to Jacksonville from New York. I was aware that VyStar members were the heart of our organization, and I quickly realized that VyStar shared the same philosophy I had when it came to collections.
I have been able to work with our wonderful members and offer them multiple solutions when they need assistance. The difference in collections philosophies is night and day when compared with my experience as a young adult and my previous work experience. Now, each day when I leave work, I have a sense of accomplishment in knowing that I am actually able to be a helpful resource for others — not a roadblock.
What I’ve Learned
When I look back on the past and think about what I could have done differently, several things come to mind. The one that stands out the most is the fact that I should have used the resources that were available to me at the time. I could have sought assistance through my financial institution or even on websites that offer free credit counseling.
Today, it is even easier to get support, especially through your financial institution. The Money Makeover experts at our VyStar branches can help you pay down your debt and work with you to help increase your credit score. We also offer free financial counseling in partnership with BALANCE to help you reach your long-term financial goals. Or, one of our debt consolidation solutions could help you get back on track. If I could offer advice to my younger self, I would urge myself to seek out assistance — like that offered by VyStar — in order to fix the situation rather than run from it and make it worse.
If you find yourself in a situation that’s similar to what I experienced in my teens, don’t be afraid to reach out for help. If you are a VyStar member in need of guidance, call us at 904-777-6000 or 800-445-6289. Our financial professionals are here to listen with a compassionate ear, help you get back on track and equip you with the skills and tools you need to enjoy a healthy and happy financial life.