FICO Scores Under Siege…Again!

We all know that not paying credit card bills and loans in a timely manner can upset your FICO score, but did you know that overdue library book fines and parking tickets can also hit you where it hurts most?

More and more state and local agencies are turning to collection agents for all manner of receivable funds—library book fines, traffic fines, parking tickets, you name it. If you owe, they’re looking for you.

This is indicative of an even bigger problem—plugging holes in state and local budgets. Shortfalls have accumulated from overspending when times were good, along with sharply reduced federal monies sent to states because of the Iraq war funding, followed by the dwindling tax revenues of late. The reserves that once existed for rainy days and emergencies have been spent plugging other holes—now they need more, and this is one method of getting it.

Enforcement of these penny-ante penalties has been pretty lax in the past, but no more. Desperate times call for desperate measures, and I’d call hitting us right in the FICO over a library book fee pretty darn desperate! The cost of employing a collections agent far exceeds the uncollected fine by magnitudes.

Does this make sense? Not on an individual basis, but when you consider the would-be hordes of overdue books and unpaid tickets lurking out there...it makes you wonder. It would also make you wonder why someone would knowingly put his or her FICO score at risk over a lousy Harry Potter tome or a quick NYC double-park.

Consider this a friendly warning from someone looking out for your wallet (and mine), and don’t be surprised if you hear of FICOs getting dinged for not tipping the waitress at Denny’s, or Blockbuster reinstating that late fee with “Guido the FICO-breaker” as collector.

*NEW TWIST: Now credit cards, such as Capital One and AMEX, with no stated maximum credit limit (or no PUBLICLY stated credit limit—Capital One) can affect your FICO score. When reporting to FICO, only your highest balance is reported as a “maximum limit”, and that can change from month to month. To avoid this, make sure a “maximum limit” is stated and reported to credit reporting agencies—if yours doesn’t, then either change cards, or run up high balances that you can afford to pay off each month.

http://ezinearticles.com/?What-Is-A-FICO-Score?&id=15787

http://moneycentral.msn.com/content/Banking/Yourcreditrating/P121551.asp

http://articles.moneycentral.msn.com/Banking/YourCreditRating/WeirdStuffThatHurtsYourCredit.aspx
(sorry: links will not form inside text here for some unknown reason)

*PERSONAL TWIST: I don't know if anyone else has experienced this, but it happened to me twice now--after possessing a Citibank card and an AMEX card, the companies suddenly quit sending me electronic bills after about 1 1/2 years of doing so faithfully. After about 2 months of unnoticed bill absenteeism, I got a letter about "my delinquent account," EVEN AFTER PAYING BILLS ON TIME AND IN FULL AS LONG AS I RECEIVED THEM! I don't know if this is a national epidemic or not, because I never see or hear about it from other places. I solved the problem by opening a CC account with my bank--THEY certainly won't forget to electronically bill me every month! I suspect this is a new scheme being used by the national cards--since I pay on time and in full, they aren't making any interest, late fees, or over-the-limit fees from me, making me unprofitable to them. What better way to generate fees from me than to "accidentally have a computer glitch which never sends an electronic bill after 1 1/2 years of membership."