Ignoring Small Bills Can Damage Your Credit Scores
Posted: May 19, 2015

Many people ignore small bills for one reason or another. Most of the ones that I have seen are ones that involve insurance companies. If you have been to the doctor and then your receive a bill from the doctor's office for a small amount you may have a tendency to ignore it for a while thinking that the insurance company will eventually pay the amount due.

What Can Affect Your Credit Score?

It may be something as simple as just a five or ten dollar co-pay but when not paid the doctor's office will eventually report this amount due to a collection agency which will also be reported to the credit bureaus. As a collection item it could hurt your credit scores by as much as 75 to 100 points.

The other area where someone tends to let a small bill fall through the cracks and impact their credit history is when they have called about the bill and someone tells them that they will take care of deleting the charge.

Employees for companies often don't follow through with what they have told you and after sometime you will find that charge as past due or as a collection item on in your credit file. It doesn't do any damage to the employee that didn't follow through but does a tremendous damage to you.

If you find yourself in one of these situations then get on the phone or write letters to the creditor and ask that they have this item removed from your credit file. You will have to follow up and make sure that they indeed do what you asked. It will take several months for it to get corrected and for your credit scores to improve. Don't be surprised if they don't go back up to the original scores that you once had.

In addition to not ignoring small bills that are due, you should always do the following to protect or improve your credit rating.

• Make sure you pay all your bills on time each month. Also, try to keep your credit usage low. Always use less than 30% of your available credit limit.
• Check your credit report frequently. You are allowed by federal law to get a free credit report once a year from each of the three major credit reporting agencies. This free report will not give you your credit scores but you will be able to view what is in your file to catch any posting errors. To get your free credit report without scores go to AnnualCreditReport.com.
• Get mistakes on your credit report fixed as quickly as you can. Even though credit card companies and lenders report your credit activity to the credit bureaus, it is your responsibilty to make sure that all information in your credit file is accurate. This might be something as simple as a wrong address or something more complex like a line of credit that doesn't really belong to you.
• Get your credit scores. Even if you review your credit file via the free credit report option it is still good to get your credit scores in order to know where your rating stands. A low rating can be costing you money in higher interest rates on most everything you buy on credit.

Know Your Credit Score

The main thing to keep in mind is to always be aware of where you stand with regards to your credit worthiness and attend to anything that might impact that rating in a negative or positive manner.

If you think about it you wouldn't ignore your bank balance or fee from the bank that might have impacted the amount of money you have in the bank.  The same should be true for your credit rating.  A bad credit rating is like having fees charged to your bank balance; you will simply be paying more for everything you buy on credit due to higher interest rate charges.

So deem your credit worthiness an important item in your life.