What Would You Do? Pay $40 Or Destroy Your Credit?

During a recent trip to downtown Edmonton, I purchased an all-day ticket from the lot’s dispenser, put it on my dashboard, grabbed my laptop, and left. Three hours later, after my seminar, I got back to my car only to find a violation ticket for $40 under my wipers. What the heck? I was choked! It turns out that the wind had blown the receipt off my dash when I opened the passenger door to get my laptop bag.

The majority of people would ignore the ticket, while some might phone the company and try to talk their way out of it. That may work, but I doubt it. The ticket wasn’t displayed so the fine was issued. Even if someone can talk their way out of it, unless they take the extra step of getting the ticket voided in writing, it will show up again.

Within a month, the collection letters will start to arrive. Then, a few months later, this will end up at a collection agency. After their hate letter, they’ll report it to the credit bureau. You now have a collection on your report. That will drop your credit score about 100 points if you had a decent score prior to this. In other words – it’s destroys your credit.

But the chain reaction gets worse: Your interest rates on your credit line and some new borrowing will now jump a lot! Sure, you can eventually pay the ticket. There’s even a small chance you can convince them to remove it. But it’s more likely it’ll just get changed from an outstanding collection to “paid in full”. And for the next three to six years this impacts your borrowing ability or rate.

Unlike most everyone else, I swallowed hard and paid the fine the same day. Expensive lesson learned – something I call a stupid fee. But a $40 lesson is a lot cheaper than thousands of dollars in higher rates, and years of credit problems.

A Vernon person emailed me the same kind of issue. He had collection letters he ignored and now the item is on his credit file. What can he do now? Pay it and learn a very expensive lesson for the next few years.

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