How an overdue book can hurt a credit report

Can it be wrong to return a library book late ?? or never return it. But how severe should the punishment be? Should it include a bad credit score?

Abraham Kleinman says no. Mr Kleinman, an attorney from Uniondale, NY, represented a Queens man who sued Unique Management Services for reporting his overdue bill from the Queens Library system to the credit bureaus for $ 295. The man, Rabbi Avrohom Sebrow, won a settlement over a technical detail ?? Unique’s operating license in New York State had expired when she reported it ?? but Mr. Kleinman is still angry at the tactics that were used against his client.

A library fine is not really a debt, Kleinman argues, and should not be covered by regulations that allow collection agencies to report bad consumer behavior.

“That’s his opinion,” said Kenes Bowling, spokesperson for Unique. For 15 years, the company has successfully operated a “document collection” business as a debt collector for libraries, and it relies on its ability to threaten scofflaws with negative credit reports.

When a customer does not return a book and it is then billed by a library, Mr Bowling said: “This is a legitimate debt, and it should be credited.”

It is not clear how many library users are reported to the credit bureaus, or how many have difficulty obtaining credit as a result. The three major credit bureaus, TransUnion, Equifax and Experian, compile information from lenders and debt collectors and provide it to banks and other lenders who use it to estimate the likelihood of a consumer repaying a loan ?? and therefore who should get credit and at what interest rate.

Federal regulations only limit the age of a late payment before it is reported and for how long? seven years ?? that negative information may remain on a consumer’s record. It’s up to the credit bureaus to decide what types of payments to record, and they usually choose the ones they think will be of use to lenders who are their customers, said Rebecca Kuehn, deputy director of the privacy and security division. Federal Trade Commission Data Protection. identity protection.

Experian and TransUnion accept reports from Unique, according to company spokespersons, but only list debts over $ 50 on consumer records.

David Rubinger, vice president of Equifax, first said the company does not accept library debt reports. It would be unfair, he said, because not all libraries use a debt collector, and consumers whose libraries do not use them would have a market advantage over people whose libraries do. .

But after further investigation, Mr Rubinger said Equifax received library reports without realizing it because the nature of a debt is not always clear from the records. The data was discarded because it lacked the numeric coding the business needed to categorize the types of debt.

Traditionally, only loans and other debts with payments made on time and interest assessed ?? such as mortgages, car notes and credit cards ?? end up on credit reports.

In recent years, collectors in some states have reported rent and utility payments. Credit bureaus say this practice is a way for people who choose not to buy on credit to show that they pay their bills on time. Critics say the additional reports extend the reach of creditors.

Mr Kleinman argued that if library fines are reported, they should also be used to establish a positive credit report.

“It should be the good, the bad and the ugly,” Kleinman said. “If you can report a library record, it must be balanced and include all of the times a consumer has visited the library and followed the rules. “

Mr Bowling said that less than 10 percent of library users that unique contacts regarding overdue documents and unpaid fines end up being reported to the credit bureaus.

Once library debt is paid, Bowling said, even if it has been reported to a credit bureau, it usually has “minimal to no influence on a person’s credit rating.” The amounts are generally too small to worry creditors.

But creditors are taking note if the report says the library patron has unpaid debt or overdue documents, Bowling said. “So if, for example, I have unpaid library debt on a credit report and I apply for a mortgage, the creditor usually won’t give credit unless the debt is paid,” a- he declared.

Steven R. Katz, spokesperson for TransUnion, said the best way to stay out of trouble is to pay off all debts quickly.

“If you try to apply this rule to all of your transactions, whether it’s a library book, a parking ticket, or a credit card account, you’ll never have to worry. ask because you will know that you are managing your finances responsibly. way, ”he said.

Jeannean Kenney, senior policy analyst at Consumers Union, which publishes Consumer Reports, said: “What will be shocking to consumers is that a five-year library fine could affect your credit score. You don’t expect it to land on your credit report.

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