Law Office of Allan E. Dunaway, PLC

Small debts can hurt credit

Most people in Kentucky know that in today's economy, credit matters. However, not everyone is aware that small outstanding debts can cause just as much damage to credit scores as large ones.

Whenever a bill goes unpaid irrespective of its size and is reported to a credit agency, the consumer's credit score drops. Different types of consumer debt are reported within different time frames. Some, like medical bills, may take months to appear. Others, like credit card delinquency, will show up as soon as a payment is missed.

This happens regardless of whether or not the consumer is aware of the debt. A single medical procedure, for example, can generate multiple charges and bills from different providers. The doctor, facility and laboratory might all send separate invoices, and if one does not come through, due, for example, to an incomplete address, the patient may think that the balance has been paid when there is actually a negligible amount outstanding. Even the smallest amount can have a negative impact. To that end, it is imperative to be vigilant in monitoring credit reports and proactive in contesting or resolving any issues that appear.

At times, getting out from under debt and bad credit can seem an impossible task. Bills pile up, the phone rings with seemingly endless calls from harassing creditors and it can all feel overwhelming. In such cases, it is important to examine all options, including arranging payment plans with individual creditors or even declaring bankruptcy. An attorney who has experience in bankruptcy law can assist in determining the various alternative methods of debt relief that may be available.

Source: FOX Business, "Small Debts Can Lead to Big Credit Score Problems", Erica Sandberg, July 17, 2014

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