Can Unpaid Traffic Tickets or Library Fines Hurt My Credit?

There’s been some recent reporting that traffic tickets/fines and/or fines for running toll gates will end up on your credit reports.  That is possible, but not as you may expect.  Traffic tickets or library fines are not reported on your credit report until they are unpaid and turned over to a collection agency.  The unpaid bill is reported as a collection listed under the name of the collection agency, not under the city or county. Cities or counties don’t report traffic tickets or library fines to credit bureaus. Neither is this information recorded at courthouses, which is a source of public record data included in credit reports.

Reported by collection agency

Some cities or counties turn over unpaid parking tickets, traffic tickets and library fines to a collection agency.  By law, collection agencies can report accounts they are collecting to the credit bureaus.  The collector uses this as leverage to get the debt paid.   A collection is considered negative and can deduct between 45 and 125 points from your credit score. The higher your score, the more the collection reduces your score. A collection account is considered debt that is severely past due and is usually charged-off. It indicates that you don’t pay your bills currently and were over 150 days past due.  Collection accounts remain on your credit report for seven years (based on the date the account went 180 days delinquent) and have a major impact for at least 3 years to 5 years.

This practice is beginning to be a new trend. Many city and county governments are short on funds and are using new means to increase their revenue. They are even going across state lines to collect these debts. A library fine is probably a stretch, but I guess it depends on the amount.

If you get a parking or traffic ticket or library fine, don’t ignore it; you need to pay it.  These fees seem minor and not related to credit but you never know what to expect.  The next notice could inform you that the bill is being sent to a collection agency. There is more at stake than just the negative impact on your car insurance based on the ticket; it also can negatively impact your credit.  This is also true for the library fee, which you would never correlate having an impact on your credit.

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JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.