A few weeks into the new year, I’m dealing with a 6-year-old credit nightmare. The story in a nutshell: I co-signed for a card for my son, forgot about the account and lately I have been wrestling with my credit union card issuer.
My once-excellent credit score? It’s tumbled 130 points.
Spoiler alert: This story may have a happy ending.
One credit mistake snowballs over the years
Here’s the parade of mistakes that left me in this credit mess:
Mistake No. 1: I knew when I co-signed for my son’s card in 2012 that I was on the hook to pay the bill if he didn’t pay it. What I did not realize: Neither the card issuer nor my credit union had any responsibility to notify me if he paid the bill late or didn’t pay at all.
Mistake No. 2: I forgot about this account. I am a joint member on my son’s savings account at our credit union, and that account does show up online under my member number. As a co-signer, however, I don’t see his credit card account under my member number. If he had been an authorized user on my credit card, I would still be on the hook for his charges, but I would see those charges on my card.
Mistake No. 3: After my son graduated from college and became active-duty Air Force, I got tired of dealing with his mail, so I sent the credit union what I thought was his new address. The apartment number was missing a digit, so he didn’t get his mail.
Mistake No. 4: My son thought he closed the credit card account in July 2017. He never received the new card in July (see mistake No. 3) but the account remained open.
Mistake No. 5: My son had an Amazon Prime membership linked to that card account. He thought the Amazon account was linked to another credit card he had on record to purchase items at Amazon. But the $99 renewal charge went through in June 2017 on the credit card he thought was closed.
These five mistakes led to a big problem: His card was billed for the Amazon membership, but he never received the credit card bills. He didn’t suspect anything because he thought the account was closed.
Miscommunication adds to the credit mess
The nightmare was just beginning. The problem is worse, as I learned in a series of incidents:
Incident one: I received a notice in December from a credit monitoring service (I’ve been part of several of the recent big data breaches) that there was a new item on my account. I checked. The notice said I had a delinquent account at my credit union. I called the credit union, related the issue and a representative told me I had no delinquencies.
Incident two: I received another notice in January from the same credit monitoring service. This time, I got copies of my credit reports (free) from TransUnion and Experian. (You can get your TransUnion credit report for free at CreditCards.com.) Those reports had the credit card account number, a number I didn’t recognize. I called my credit union, and again I was told I had no delinquent accounts.
This time, though, I provided the credit card account number. When I did, the representative paused. She implied that the number was for another member and provided no more information. I assumed my credit information had been erroneously mixed with another credit union member’s or that I was a victim of identity theft. I asked to be transferred to the fraud department where I left a message. One week later, no one had called me back. In the meantime, I initiated a fraud investigation at Experian.
Incident three: The collections department of my credit union called me. This was completely unrelated to my calls to the main number or to the fraud department. They said my son was delinquent on a credit card for which I had co-signed. They said he owed $216. And, actually, the amount had ballooned to more than $280 by then. The original amount was $99, plus a small amount of interest and more than $150 in late fees.
I explained to the collections department representative that I had tried to resolve the issue in December and been given bad information. I managed not to use any bad words on the phone. The rep kindly waived the late fees and lowered the interest rate. My son now owed only $105. But that wasn’t the big issue.
Incident four: I decided to check my FICO score. I am glad I was sitting down. My score had dropped from around 830 to 699, with this card co-signer nightmare the reason for the much lower score. I’m certain my son’s score is much lower, too, which could impact his security clearance.
Incident five: The credit card issuer had reported my son and me as delinquent without making any attempt to contact me. The credit union and the card issuer have numerous ways to do so: The credit union has our U.S. mail address, phone numbers and email address. We also do online banking with our credit union. My husband and I have been members of that credit union since 1987. Between us, we have a checking account, four savings accounts, a line of credit, and two small car loans that are completely caught up. I also did some research. My credit union is not obligated to inform me or try to collect a delinquent bill from me before turning it over to collections.
Incident six: After I had begun the process of trying to resolve this issue, I received a harsh letter from my credit union saying they were “disappointed” to have to contact me “again” about my nonpayment of the account. The letter was dated the same day as the initial phone call from the collections department and two months after I tried to resolve the issue. I was unhappy and relayed my unhappiness to several representatives. They all know who I am now.
Lessons from my credit nightmare
What I’ve learned (so far):
One: Never co-sign on a loan or credit card. If you feel you must help, it is better to be joint owner on the loan and make sure you receive copies of all bills. If you’re going to help someone get his or her own credit card, make your child or spouse an authorized user on your card. As the primary account holder, you’re responsible for paying the bill, but you see the charges that the authorized user makes.
Two: Don’t take a financial institution representative’s (possibly misinformed) word that all is well when it comes to your credit, your financial identity or possible delinquent loans or bills.
Three: I learned my credit union contracts its credit cards to an outside vendor. My credit union did not know about the delinquency until a week or 10 days before they contacted me. The outside vendor sees me only as a potentially bad number on the balance sheet — not a 31-year member of the credit union with a long and excellent payment history.
Four: Escalate as necessary to get a resolution. I continued to escalate and finally got a good resolution.
What appears to be a happy ending
In addition to waiving the late fees and lowering the interest, my credit union did something more critical: The collections supervisor agreed to remove the trade line from both my and my son’s credit history at the three major credit reporting agencies.
The credit union collections supervisor also said the credit union planned to review how it handled calls such as my original call to the main contact center asking about a potential delinquency. Workers will be trained to dig more deeply to find possible problems such as mine. Workers also will be told to refer details to the collections department to follow up. The supervisor also told me she planned to look at rewording the harsh collections letter I received after I already had started the process to resolve the issue.
Since I’m joint on my son’s savings account, I was able to transfer the payment over the phone to apply to the amount owed.
Meanwhile, I hope to get my credit score back into the 800s – sooner, but I’ll settle for later. I hope I don’t have to get credit on my own before then, though. My husband’s score is still 832. I’m jealous.
See related: Poll: 4 in 10 co-signers lose money, 6 questions to ask when adding an authorized user to your card, Complain and win: 4 tips for calling credit card customer service