Have you ever disagreed with a bill you received from a cell phone service you discontinued; or a doctor bill you were sure you paid? All of us have had to go toe-to-toe with some company or another over errors in billing and in most cases we usually get the problem cleared up and the issue is taken care of.
Then again……..there are those times that you are sure you’re right but they just won’t see it your way, and they send that $25.00 doctor bill to some nasty collection agency. You try dealing with the collector and after you don’t have any success, you simply ignore him until he goes away. Which, he eventually will do.
However, what doesn’t go away is the negative report that’s been left on your credit.
So what’s the big deal? How bad can a dispute over $25.00 impact your credit? After all, the amount is so small and there is no reason why you should have to pay it. You’re sure you’re right…….right??
The truth is it can be a very big deal! This is something I encounter all of the time and just today I dealt with a client who had otherwise perfect credit. But, she had one delinquent medical bill for the aforementioned $25.00 that went to a collection agency and it dropped her credit score by nearly 100 points!
In her case it lowered her score to the point where it cost her an extra $1,500 in fee in order to get the interest rate she wanted on her loan.
There are times in life to stick to your guns and fight for what’s right, and then there are times where it makes more sense to simply pay the bill and minimize any damage to your credit. In this case the $25.00 collection proved to be far more expensive in the long run.
I’m not suggesting that a person mindlessly pay when they believe the bill is wrong. But in cases like this, small dollar disputes can have far reaching and expensive consequences that you may not anticipate. I’ve dealt with many clients who have had several small collections like this and it prevented them from qualifying for a loan. That is a tragedy.
If you are getting ready to start looking for a home to purchase, or you need to refinance, have a lender you trust run your credit first and make sure there is nothing hidden in the report that could hurt your chances for getting a loan.