Student LoanDown readers, I’d like to introduce you to guest blogger, Jason Vasquez. Jason oversees corporate communications and media relations for Wells Fargo’s student and auto lending businesses. He has served on numerous nonprofit advisory boards and committees, and is an avid adventure seeker, having traveled to more than 50 countries and summited peaks around the world.
In his post today, Jason tells us about how Wells Fargo is working with customers to help them understand their credit scores and the effects of their credit history! (—DF)
When I reflect on my teenage years it seems that none of the lessons I learned from team sports or from high school classes prepared me for how I was to recover after accumulating nearly $40K in credit card debt by the time I graduated from college.
As a teen, I made the decision to apply for my first credit card. From a magazine that I received monthly as part of a subscription, I removed the promotional tear-out and filled-in the seemingly basic information being requested; first and last name, address, social security number, and signature. A couple weeks later I received a letter in the mail and immediately knew it was my new credit card ‘cause let’s face it, how many teenagers get mail? Before opening the envelope, I remember experiencing a rush of energy because I was eager to learn how much “free money” I would be allowed to spend. It took a split second to tear that envelop apart and after a dismissive glance at the accompanying letter I was $2K richer!
Over the next couple of years, I purchased clothes, a couple mobile phones, lots of pizza, gas, an awesome sound system for my SUV, new sneakers every few months, a $400 pair of sandals (yep, they exist), and tons of other stuff. In high school I worked part-time at a family-owned electronics store, which allowed me keep up with monthly credit card payments, but essentially I was revolving that $2K in credit card debt – and learned years later that this practice negatively impacts your credit score.
In 1997 I became a freshman at the University of California at Santa Barbara, and because I maxed out that first credit card, I applied for another credit card to buy more merchandise that I really didn’t need. When I came close to reaching the credit limit on that credit card, I applied for another. By my sophomore year, I had seven credit cards and all were maxed out. My reckless pattern of spending habits, coupled with my ignorance about money management, and lack of knowledge about how credit works left me with $40K in credit card debt and zero insight on how I would pay-off this massive amount of debt that had an interest rate of roughly 15 percent.
I share this testimonial because my scenario is not uncommon in the US, but to also serve as a reminder that it’s never too late to get smart about your credit. From Oct. 1 through Nov. 16, 2014 Wells Fargo is promoting “Get Smart About Credit” month starting with a free credit score promotion. This will provide consumer customers the opportunity to receive complimentary, no obligation access to their credit score and credit report. After reviewing this report the customer has the option to meet with a banker for a free financial review. Or they can choose to review their credit score and credit report on their own.
And to help young people get a better handle on understanding credit and how to leverage it effectively, Wells Fargo bankers will volunteer their personal time to teach credit and money management basics in classrooms and community centers through the end of the year.
For 6 years, roughly $600 of every paycheck went to paying down my debt, and frankly I missed out on a lot of opportunities because I didn’t have financial freedom and flexibility.
Whether you’re a student or parent I would encourage you to have more conversations about money, finance, credit, and retirement either together as a family or with a financial planner. It’s as simple as asking, “Mom, what tips do you have to pay down a credit card?” or “Dad, I’m not sure I know why people talk about credit scores all the time. Why is it important?” Practically every financial goal you have in mind, whether it’s buying a home, a new car, paying off student loans, planning your retirement, or saving for that trip around the world, if you plan it right, you should be able to attain it. Coming out of credit card debt wasn’t easy, but over the years I became smarter about my credit and finances. As result of some discipline, in 2012 I was able to purchase a new car, and in 2013 I became a first-time homeowner. And believe me, there was a time when I believed being able to accomplish that was impossible.