It was all over just about as soon as it started. As a college freshman, a (mostly) independent "adult" away from home for the first time, I succumbed to the constant offers from Discover Card and Columbia House CD-of-the-month club. I was all in, and I was in over my head. It wasn't long before I'd maxed out that credit card and was forgetting to send back the CDs I didn't want, and unbeknownst to me, my credit was plunging faster than the stock market as the tech bubble burst-- I got hammered there, too.
Despite my credit crash, I had sufficient income from a legal settlement to get a car loan, albeit at an astronomical interest rate. But wouldn't you know it, I fell behind on that, too. After a few missed payments, the repo man came-a-calling, but I stymied him by selling the car to a friend under the table and I managed to pay the bank off before they ever found that Pontiac. But as you might imagine, this didn't help my credit woes.
That legal settlement I mentioned was large enough to buy my own first home, a smallish condo in Los Angeles, when I was 25. I paid cash. Then I needed cash-- living the Hollywood life isn't cheap. By that time I was painfully aware of just how abysmal my credit was, without actually knowing the score, but I was still able to secure a loan against the equity in my home. The interest rate was obscene, and the loan was only for about half the value of the condo but, hey, I needed the money.
Within a year, I was missing payments on that loan. Foreclosure loomed. To make matters worse, I'd hired a friend-- and put down a significant down payment-- to do major renovations in that 1960s-era condo. He made it through the demolition stage before running off with the money, leaving me with a gutted home and imminent foreclosure. The bank actually sent me a video explaining exactly how I would be kicked out of my own home. Luckily, this was the height of the property boom and I was able to arrange a hasty sale-- at a significant profit.
I took that money and got the heck out of Dodge. I sold or gave away all my worldly possessions, bought a backpack and traveled the world for five years. And wouldn't you know it, that was just as damaging to my credit as any of my past screw-ups. I returned stateside to discover that my credit score was actually the equivalent of zero-- Since I was off the grid, so to speak, for so long, there wasn't much for the rating agencies to score me on.
Needless to say, I had some work to do if I was to have any hope of ever restoring my credit. That legal settlement had run out and I could no longer afford to pay cash for everything I needed. I painstakingly set about righting my credit ship. It turns out the most meaningful thing I did was to obtain a secured credit card. After making numerous on-time payments, my credit score actually improved to the point where I was able to get a real credit card at a decent interest rate. The last time I checked, my score was in the mid-600s-- the highest it's ever been.
I still get occasional letters from collection agencies seeking to recoup pennies on the dollar for debts incurred in my youth. I am in the process of dutifully paying these off. I learned far too late the importance of clean credit, but I'll never let myself repeat the shocking mistakes I made in my 20s again.
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