Blog sponsored by Bankrupt-Law.com

NEW YORK (1/19/06)--If you have unpaid parking tickets or library fines, you
may wind up paying a higher interest rate for a loan (The Wall Street
Journal Jan. 3).

The newest threat to your credit rating may not be a large-scale data
breach; a growing number of cities looking for ways to boost revenue without
raising taxes are going after unpaid municipal fines and fees. The records
are sent to private collection agencies, which then try to track you down.
The city decides whether the negative information ends up in your credit
file, and the black mark could stay there up to seven years, wreaking havoc
with your ability to get a decent interest rate.

Technically, any bill more than 30 days late can be reported to a
credit-reporting agency, though some governments and companies give
consumers more time before reporting past-due accounts. Both TransUnion and
Experian, two of the three major credit-reporting agencies that compile
information about consumers' credit history, admit they include information
about overdue municipal fines and fees on credit reports. However,
Equifax--the third major credit-reporting agency--says it makes an effort to
weed out small charges like library fines and parking violations from its
files.

Regardless of the dollar amount, negative information on a credit file can
cost hundreds or thousands of dollars in interest charges over the life of a
loan. You'll pay more for your credit with higher interest rates and higher
down payments. A credit score could decrease by as much as 100 points
because of one library fine.

If you think you have unpaid fines, call the government agency or collection
company and try to work out a compromise. When you pay the fine, ask that it
be removed from your file. Be polite but diligent--your credit rating is at
stake. And resolve to pay all bills on time from now on.