Your credit record can be hurt an overdue library book or traffic ticket!

Most Americans have been affected by the economic slowdown of the last five years. Salaries are down, job growth has been slowed and unemployment has been high. Times have been tough for individuals, but they have also been tough on city, state, and county governments, who have found their budgets stretched to the limit. In order to maximize the use of their limited budgets, these governments have taken an unusual step - they have hired collection agencies to help them manage their fines. What does this mean for the average consumer? It means that an unpaid parking ticket or library fine could not only affect your credit record, but it could actually prevent you from obtaining a job, place to live or even an auto loan.

The credit report and FICO credit score, managed by the three main credit bureaus (Experian, Equifax and Trans Union) have become vital documents in the world of financial transactions. In years past, the credit report was usually requested only by lenders for home or auto loans. In recent years, the list of businesses that typically request credit reports for prospective customers has grown. Your report might now be reviewed by the phone company, a prospective employer, or even a possible landlord. Each of these businesses wants to be sure that they are dealing with someone who is financially responsible, and by checking the credit report of possible customers, they are minimizing their risks. The credit score which accompanies the report consists of a three digit number between 300 and 850 that represents the credit worthiness of the customer in question. The higher the number, the better the credit. Anything negative, such as an unpaid bill or bankruptcy, lowers the score, although the score can be increased by fulfilling the financial obligation. Many small governments now hire collection agencies to collect their unpaid parking tickets and library fines, and unpaid fines and tickets now will show up on the credit report of the customer in question.

This system isn’t used everywhere, so whether or not an unpaid bill shows up on your record is a function of where you live more than anything else. Some cities and counties use it; some do not. And while Fair, Isaac and Co., the creators of the score, have modified their scoring model to not be affected by debts of less than $100, not all lenders use this system. Since many people move frequently, it’s quite possible that you may have a fine for an overdue book or unpaid parking ticket on your record and not even realize it. Some people don’t find out about these things until they have been turned down for a loan!

The best solution for this problem is to regularly check your report. You can do this for free at the Free Credit Report Website which has been set up for this purpose by the three bureaus. It’s one thing to have your financial record affected by debts you know about, but the last thing you want is to lose out on a loan because you forgot to return Harry Potter to the library.

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