Last Friday’s post on My Next Buck (a “Friday Financial Foul-Up”) reminded us that late movies can hurt your credit report. In fact, not returning a movie can keep you from being considered credit-worthy enough to rent an apartment.
Your use of credit cards, loans, and other forms of credit aren’t the only items that show up on a credit report and affect your financial power, not just to use credit but also to get important things like apartments and possibly even jobs. This is called “alternative credit data” and while it doesn’t necessarily influence your credit score, it’s something that lenders and even potential employers can see.
Even if you don’t use credit at all, these things can still show up on your credit report.
Defaulting on Rent
Speaking of that apartment—your landlord can report evicting you for non-payment of rent. Whether or not they choose to do so depends on how they’re set up. A person renting their second home is less likely to do so than a large property management company.
Unpaid Medical Bills
Unpaid medical bills can turn into a nightmare. Not only are they often turned over to collection agencies (and there are several levels of collections, from companies that help small doctors with small staffs follow-up on bills to companies that live up to every negative image we have of collection agencies), but if unpaid they can appear on your credit report.
Unpaid Library Fines
More and more library systems are teaming up with collections agencies to handle their unpaid late fines and lost book collections. Library materials and fines add up. With circulating materials which include videos & audiobooks. It doesn’t recoup all their money, but if they can get $0.10 on the dollar then it’s worth it compared to nothing.
If you don’t pay the fines, the collections agency will file a report with credit agencies.
Unpaid Parking Tickets
Some towns are doing the same thing with parking tickets. It’s not their best option, but pennies on the dollar is better than nothing on the dollar. And while it makes less sense when you think of individual tickets, when you consider how many tickets even a small city issues in a year, it makes sense to turn them over to someone to get something back.
Again, if it’s been turned over to a collection agency and you don’t pay, it’ll get reported.
Unpaid Utilities, Cable, & Monthly Bills
Right now, many cable companies, utilities, credit cards, etc, don’t report late payments and delinquencies to credit agencies. However, it’s happening in some states and if it works there, the companies may look into implementing it elsewhere. For large companies with long lists of delinquencies, especially when times are tight, it’s worthwhile.
On the bright side, if it becomes standard practice, it may be a way for people who’ve used little credit but have paid their monthly bills on time for years to establish a good credit history. In fact, it may offer an alternative to opening a credit account altogether.