You likely know some of the most obvious things that can send your credit score into a tailspin — filing for bankruptcy, having your home foreclosed on, habitually being late on payments and not returning a library book on time. Wait, what does the library have to do with your credit? A lot, actually.
Read between the lines
So you checked out a book from your local library and somehow lost track of the due date. Come the day that you’re supposed to turn in the novel, your borrowed literary work is still sitting on your counter and missing from its normal spot on the local librarian’s shelf. The library subsequently charges you a late fine, but since the amount is so small, you decide not to pay it. But before you know it, that late library book fine turns into a financial nightmare as your good credit is being threatened with a call from a collection agency. How did that happen?
Certain libraries are turning to collection agencies to recover the outstanding late fines that bookworm patrons aren’t paying. Going to collection — regardless of whether it’s for a library book or something else — looks bad on your credit report. The collection agency may report your unpaid fee to a credit-reporting agency, which is where your credit score and your late library book cross paths. If this happens to you, you could receive added penalties from the collection agency as well as a hit to your good credit, all in addition to that minor fee you shrugged off to start the whole situation.
Moral of the story
What can you learn from this tale of library fines gone wrong? As you carry on in your everyday life, don’t just make good on payments you assume will affect your credit. As you can see, it’s not just credit card bills that people with good credit need to be punctual on in order to keep their credit standing. It’s library fines, parking tickets and a number of other fees as well.
Try to avoid racking up such penalties in the first place. If you are faced with a charge, pay it promptly (one of the keys to good credit in general is making payments on time, as it’s an indicator of your creditworthiness). If you don’t do so, you could end up with a lower credit score, which may mean you’ll be turned down for future loans or credit cards for people with good credit that you apply for.
Library patron image via iStock.
The post How Library Fines Can Hurt Your Good Credit appeared first on NerdWallet Credit Card Blog.
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