Few people realize it, but unpaid parking tickets — essentially debts owed to a city or municipality — go through the same process as any other unpaid bills:
- You’re warned
- You’re charged late fees
- Continue to turn a blind eye, and you’re turned over to a collection agency
“There are so many areas of non-traditional credit that is extended to Americans every single day,†said The Money Coach, Lynnette Khalfani-Cox. “People don’t equate the fact that these things may potentially have an impact on their credit score, but they absolutely can,†she added.
FICO (Fair Issac and Company) is the company that takes the information in your credit history and puts it into a mathematical formula in order to calculate your credit score. Lenders use that score to determine if you’re a good credit risk, if they’ll give you a loan, and how much they’ll charge you. FICO scores have a 300-850 range and scores that are 700 or higher, are considered strong.
Payment history — whether or not you pay your bills on time — counts for 35% of your total FICO credit score, and unpaid collections take an even bigger toll.
If you do receive a collection notice due to an unpaid fine to a county or municipality,
- The first thing you need to do is pull your credit report. You can get a free copy once a year at www.AnnualCreditReport.com
- The complaint will show up in your credit report under a section called “derogatory marks.â€
- If it’s accurate: pay your fine as quickly as possible.
- If you find an error or if you’ve paid the bill and it’s still showing up, dispute the report
The three major credit bureaus, Experian, Equifax, and Transunion, all have areas on their websites where you can submit written challenges.