The economic downturn of the last five years has affected millions of
Americans, but it has also affected the budgets of states, cities and counties.
With limited tax dollars with which to work, various government entities have
had to try to stretch their budgets to allow them to continue to function. Many
government agencies at the state and local levels have turned over debt
collection to collection agencies, even for such seemingly small debts as
parking tickets or library fines. What does this mean? An unpaid parking ticket
could end upon on your credit report.
Credit reports and the associated FICO credit score have become an increasingly
important part of the lives of Americans. At one time, the credit report was
primarily used by mortgage lenders to determine if a prospective customer should
be granted a loan. In recent years, the credit score and report have been used
for an increasingly large number of uses by all kinds of companies. Employers
use them to avoid hiring financially irresponsible people and landlords use them
to determine if a person might be a responsible tenant. As credit reports are
used more often, blemishes on your credit report become magnified in importance.
In past years, only significant unpaid debts or bankruptcy filings might have
inhibited the issuing of credit. But now, with credit reports being used by so
many more businesses, something as small as an unpaid parking ticket can prevent
someone from obtaining a job or a lease on a good apartment.
This system isn’t all that equitable; not all cities and counties report unpaid
fines to the credit bureaus. Worse, while the company that originated the FICO
score has adjusted their scoring system to account for small fines, not all
lenders use that version of the scoring system. Because of this, whether or not
such small things affect your credit score is can be determined by something as
simple as where you live or with whom you choose to do business. Fair or not,
consumers need to be aware that some small debts may find their way into the
credit score and the only way to be sure is to check your credit report
regularly.
Most Americans can obtain a copy of their credit report for free at
www.annualcreditreport.com. Many people who have had their scores negatively
affected by small fines were unaware that they even owed them. This can happen
if the debtor has recently moved. Paying the fine can quickly resolve the
problem and raise the credit score again, so by all means, check your credit
report!
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to establishing credit, debt consolidation and credit counseling.