Credit 101

This is a story about how I didn’t know I had a credit card for 4 years.

Yes, you read that right, and no, I’m not kidding.  I’ve shared this story with a select few people up until this point and thought what better way to start off my blogging career than with an admission of absolute embarrassment… and so, in the spirit of sharing, here goes nothing!

At 17 years old my sister and I were encouraged by our mother to get our own checking accounts; we were starting to work jobs of our own, and she thought it was about time we started to put some of it in the bank rather than stash it in a sock drawer somewhere.  The two of us – 17 and 16 at the time – walked into our local branch, sat down at some nice woman’s desk, and said “We’d like two checking accounts please!”  And so the saga begins.

They set us up with linked checking and savings accounts, asked us for all our personal information, for addresses and social security numbers, our mother’s maiden name and which beloved childhood pet we’d like to use as a security question answer… they let us choose the background of our new checks (National Parks for me, and Mr. Potato Head for my sister), and somewhere in the onslaught of questions they must have asked us if we’d like “overdraft protection”, which sounded like a good thing to have.  So we said yes.

We must have been there for close to an hour, answering questions and feeling very adult, before we left with the promise of our new checks and cards arriving in the mail in 7-10 days, and a couple of intangible accounts floating around somewhere in the ether with our names on them.

The year was 2005, and I think we still had dial-up internet at home, so I didn’t set up my online banking account until the following year when I started college.  I registered online, thought it was very cool seeing my balance without going to an ATM, and continued to put my money into that little checking account.  Every now and again I’d move some into savings, usually hurriedly moving it back when I forgot that some bill or another hadn’t come out yet, but I slowly learned to track my spending, and sock a little away in savings when I could.

As an online banking novice, the additional account numbers on the screen never seemed to bother me… I guess I assumed it was some other number I might need some day, but somehow it never clicked that there was a third account linked to my profile.  Maybe that was the routing number for the bank; maybe it was the “parent account” and the checking and savings had their own account numbers within it – clearly, I didn’t give it much thought and was too busy with college, 3 jobs, and my social life to wonder what it might be, until I received the strangest piece of mail I have ever received to date.

I opened an official-looking letter from my bank, stating that they were increasing my credit limit from $2,500 to $4,000.  I stared at it.  What credit limit?  I read it again.  Did they get me mixed up with someone else?  I didn’t have a credit card, had never had one, and as far as I was aware, you couldn’t get a credit limit increase without having credit to begin with.  As I read the letter again for what must have been the seventh time, the truth began to dawn on me… the “overdraft protection” they had set up for me all those years ago, was actually a credit account.

My only redeeming moment in this story is that despite many close calls and a steady diet of ramen noodles, I had never once overdrafted.  I don’t know how, but somehow I managed to keep that little checking account above “zero”, even if that meant it was at $1.42 sometimes… in essence, I had accidentally, overnight, without any thought or intent, built myself a 4 year credit history, in which I’d never been late on a payment, because I’d never even been aware of it.

So once again, I found myself walking into a local branch, sitting down at some nice woman’s desk, and inquiring about an account.  This time however, I was slightly chaffed at the fact that at 17 they had not properly explained to me what “overdraft protection” meant, but I was trying to look at this on the bright side… I’d accidentally proven I was trustworthy with credit by having no idea I had any.  I was going to run with that.

I explained the situation to the banker, and asked if I could have a card for that account.  She happily replied “Of course!”, and once again I was on my way with the promise of a card in 7-10 days.  My utter lack of knowledge of credit or anything to do with it had worked out alright in this case, but knowing it could have gone so horribly wrong, I decided I wanted to be better informed so that nothing like this ever caught me off guard again.

And so began my journey of solving credit mysteries, debunking money myths, and working to become debt free…  there are so many things I wish they’d taught me in school about taxes, getting a mortgage, saving for retirement, student loans, and you guessed it, CREDIT.  I’ve been encouraged by friends and family to share some of what I’ve learned, so that others might benefit from my mistakes and successes.

And so, as the first blog post of many, the moral of this story is: don’t ignore any funny numbers just because you don’t know what they are.

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