This post originally appeared March 29, 2018 on CreditCards.com as “Unpaid cable termination fees can seriously hurt your credit“

By Barry Paperno

Dear Speaking of Credit,
I have a cable company charging me a $200 early termination fee. The only reason I’m terminating them is that the price of my bill keeps hiking up and up. If I don’t pay that fee, can they turn it into collections and hurt my credit? – Taylor

Dear Taylor,
Fortunately for many consumers, collections for such odd debts as parking tickets, court fees and library fines can no longer appear on credit reports.

For this we can thank the portion of the National Consumer Assistance Plan adopted by the credit bureaus in 2017, prohibiting collections on credit reports that don’t arise from a contract or agreement to pay.

Unfortunately for you, however, that early termination fee remains something you agreed to, though undoubtedly embedded deep within the microscopic font of the cable TV service contract.

Now that you are apparently terminating that service earlier than the contract called for, the cable company can indeed come after you for that early termination and other related fees.

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This post originally appeared February 1, 2018 on CreditCards.com as “‘Can parking tickets still be reported to credit bureaus?”

By Barry Paperno

Dear Speaking of Credit,
In your Aug. 31, 2017, article, “Library fines, parking tickets no longer trash your credit,” you mentioned that parking tickets or any other debt not resulting from a contract or agreement to pay should not be reported to a credit bureau.

Well, I have a situation here in which I “refused” to a pay a parking violation to University Parking Service because I felt it was not right. The university went ahead and tasked its debt collector to collect that debt, but the debt was listed as tuition debt. It is now reflected on my credit report.

My question to you is, since the parking violation of $100 dollars (plus a collection fee of $115) was not from a contract to pay, should it even be reported on my credit report?

Also, could you please send me a link that directs me to the actual ruling that applies to parking tickets or library fees? Thanks so much. – Allan

Dear Allan,
Have you ever heard the saying, “Don’t cut off your nose to spite your face?” It means don’t hurt yourself trying to hurt someone else. Or, in this instance, the University Parking Service.

The parking lot company and the collection agency hired to collect the $100 they say you owe have had the last word by tacking on fees to that parking ticket debt and adding a score-damaging collection to your credit report.

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This post originally appeared January 11, 2018 on CreditCards.com as “‘Pay for delete: When it helps credit score, and when it doesn’t”

By Barry Paperno

Dear Speaking of Credit,
Regarding Midland Funding and other “pay-for-delete” practices – will it raise your credit score to pay for delete if the original creditor is still reporting the debt?

When Midland deletes, does the original creditor delete also, or do they still report? – Bridget

Dear Bridget,
Rather than assume, as many do, that whenever something negative disappears from your credit report your score automatically increases, you’re correctly questioning whether that will indeed be the case with a “pay-for-delete.”

A pay-for-delete is an agreement between a collection agency and a consumer to remove a collection account from the consumer’s credit report in exchange for payment in full or a settlement for less than the full amount.

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This post originally appeared December 21, 2017 on CreditCards.com as “‘How to cancel a gym contract without hurting your credit”

By Barry Paperno

Dear Speaking of Credit,
Hi! I have an awful personal training “contract” with a well-known fitness gym. They haven’t kept any of their promises and all of the trainers are nowhere near qualified. I’m totally done with it. I know it’s not a real contract as far as credit goes, and they can’t report me to collections.

I recently opened two new credit cards to strengthen my credit, which is already pretty good, around 730. I no longer need to use the credit card that I have this account tied to.

If Bank of America will continue to allow the transaction through even if I change the card, my question is, should I close the account or will it hurt my credit since it happens to be my longest-standing card? It’s currently empty, and I have had it for about 11 years, and the other two only this month.

I read somewhere that when you close accounts they are still on your history, and you will only notice a difference if there is a significant difference in the amount of time that your cards have been opened. It may make your credit history look half as long.

This doesn’t really make sense to me. Is this true? Do they divide your time after your close an account? Will it significantly affect my credit if I close this one? Thank you so much for your advice! – Amanda

Dear Amanda,
When a business fails to deliver on its promises or simply doesn’t satisfy you, it can be easy to make a well-intentioned but foolish move that can demolish a good credit score. Considering your excellent 730 score, it’s good that you’re asking these questions.

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By Barry Paperno

Dear Speaking of Credit,
I’m trying to buy a house but my score is to low but I only need another 40 points to qualify for a FHA loan. That being said I have 3 accounts is collections that I plan on paying off next week. The most recent is June 2016 and the other 2 are 2013 and 2011. Unfortunately I don’t have any cc but I do have 2 car payments.

One collection agency has already said they’d delete upon payment, but I haven’t heard back from the other 2. If I can get all 3 deleted from my record what will that do to my score? Thank you. –Sylvia

Dear Sylvia,
Any impact to your score from deleting those collections will mostly be determined by the dates those collections were assigned to the collection agencies.

In trying to get the collections deleted, something to be aware of is that it doesn’t matter to your score how many collections there are. For collections, only the item with the most recent assign/open date will be impacting your score to any serious degree.

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This post originally appeared October 12, 2017 on CreditCards.com as “‘Q&A: How to handle old debt soon to be sent to collections”

By Barry Paperno

Dear Speaking of Credit,
When is it advisable not to pay a years-old account that is just reaching collections if it is going to be reported to the credit bureau as a delinquent account anyway? This account is for time-share maintenance. – Doris

Dear Doris,
It can seem hopeless when you know a collection or other derogatory item will be added to your credit report and remain there for up to seven years. It can also seem hopeless when you know that most of the credit scores used by lenders will continue to allow that collection to keep your score down regardless of the course you follow, whether:

• You pay off the debt or reach a settlement with the collection agency, or
• You allow the debt to go unpaid, knowing you cannot be or are not likely to be sued for payment.

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This post originally appeared August 31, 2017 on CreditCards.com as “‘Q&A: Library fines, parking tickets no longer trash your credit”

By Barry Paperno

Dear Speaking of Credit,
If a person in a foreign country receives a fine on the Metro for not buying a ticket, will his or her credit score be affected in his or her home country? – Heather

Dear Heather,
Had you asked this question prior to June 15, 2016, you might have received an answer that, yes, even a foreign transit fine could wind up on your U.S. credit reports and hurt your credit scores. You’ll soon see why this date matters.

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This post originally appeared May 18, 2017 on CreditCards.com as “‘No credit? Unpaid debts can still be sent to collections”

By Barry Paperno

Dear Speaking of Credit,
Can someone send you a credit collection notice even if you have no credit yet? Does it affect your credit score in the future? – Renz

Dear Renz,
Yes, you can be sent to collections over that past-due debt, even if you don’t have any credit. And if that collection agency reports the debt to a credit bureau, though you may not have credit or other unpaid debts, you wil have a credit report listing only this collection. You won’t, however, have a FICO credit score just yet.

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This post originally appeared April 6, 2017 on CreditCards.com as “‘Should I pay old card balance on a 1099-C I just received?”

By Barry Paperno

Dear Speaking of Credit,
I had a credit card bill go to a charge-off and then to collections about five years ago. It never has been paid. I only just recently received a 1099-C form for this debt. And, although I can now pay most of it back, I’m wondering if I should. Any advice? – Chris

Dear Chris,
On the one hand, you owe a debt that you are obliged to pay. On the other, thanks to the passage of time and that 1099-C (Cancellation of Debt) form, your situation may provide a rare exception. As you’ll see, the impact of this 1099-C on your finances is likely to boil down to whether you could or couldn’t afford to pay the debt at the time it was effectively canceled.

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