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,â€ 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,â€ 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