Previous post:

Next post:

5 Ways to Hurt Your Credit History Without Using Credit

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.


{ 2 trackbacks }

Friday Gathering: Healthcare vote Edition
March 19, 2010 at 7:02 am
Friday Finance Followers – I’m Debt Free (sort of) Edition | Suburban Dollar
March 19, 2010 at 7:58 am

{ 7 comments… read them below or add one }

Kyle C. March 15, 2010 at 6:32 am

I guess I have never thought of Library fees/fines being turned over to collections. I have never had a late fee over a couple of bucks so I find it hard to believe someone would actually turn that over to collections. I can imagine though that some people have fairly sizeable balances.
.-= Kyle C.´s last blog ..Wealthy Bloggers – March 2010 =-.

Mama Geek March 15, 2010 at 8:04 am

Not only will the library turn you over to collections, but in many areas, you can find yourself being smacked with a civil suit over it. ABC News Story about it.
.-= Mama Geek´s last blog ..Not Everything is a Ripoff =-.

Mrs. Micah March 15, 2010 at 8:59 am

@Kyle most systems have a minimum for collections. I think at the last place I worked it was $20.00 in fines or two long-overdue books. Many times libraries pay more than regular consumers do for books (& they almost always pay more for DVDs), so the fines for materials can get quite high. Replacing the book out of pocket can actually be a better solution.

I’ve seen people with $500 in late fines trying to check out more books on their kids’ cards (but we put a stop on those too if the parents listed on the card don’t return books & we know about it).

@Mama Geek yep. Depends on the town. That one guy who owed the library $7k certainly had it coming. You couldn’t take that much in goods & services from any other business and not get arrested.

Lin March 15, 2010 at 11:15 am

Unpaid cable bills can be big trouble for your credit, and one of my grown kids is dealing with this right now. He moved from his state to ours last summer, and even though he had his mail forwarded, his final cable bill was not forwarded. It somehow was delivered to his friend/neighbor and was finally received in the mail last weekend. My son completely forgot about making sure he had received all of his forwarded mail and that all bills were paid in full. Now he’s scrambling to get it all cleared up with the cable company and to see what appears on his credit because of it. Sigh…
.-= Lin´s last blog ..Paying For College – Should Parents Pay For College Tuition? =-.

Adam March 16, 2010 at 10:53 am

How about unpaid taxes? ;-)
.-= Adam´s last blog ..Packing Lunch For Work Just Got Easier =-.

Ken March 20, 2010 at 11:34 am

Interesting how ‘little’ things can have a big impact on your score.
.-= Ken´s last blog ..What Are You Working For? =-.

Kimberly Cole March 23, 2010 at 4:01 pm

I agree that there’s certainly a silver lining for people with limited credit history trying to establish good credit if this becomes standard practice. At least lenders, landlords, and employers will have a comprehensive picture. Of course, like you said, that could also be a bad thing in many cases. The use of this kind of data also represents a big benefit for lenders since people with limited credit history represent a major untapped market, and that means that lenders will be targeting people even earlier.

Leave a Comment

WordPress Admin

css.php