Little Things Count: watch out for little credit “nasties.”

Take care with all aspects of your credit profile. It’s not just that Christmas shopping VISA bill you have to worry about paying on time. There are lots and lots of “little” things that can pop up on your credit report. When they do, these little monsters can wreak havoc with your credit score.

Sometimes you can control these nasties making an appearance on some future credit report; sometimes you can’t. If it’s one of the items featured in this article from the Wall Street Journal then you had control at some point. Maybe it was a parking ticket you forgot to pay. Or that seriously overdue library book: the one from 2003!

These are examples of bits and pieces of our “credit life.” We forget how these lapses of responsibility can creep up on us in the future. Nowadays—as the WSJ article points out—the sudden appearance is on your credit report. And if you’re in the process of obtaining a mortgage, the affect on your credit score could affect the interest rate you are charged for the loan.

And then, there are the credit “nasties” which you don’t have any control over, yet they raise their ugly head on a credit report, too. These are the surprises for customers that I see most often: a collection account for a medical bill that should have been covered by insurance or a collection account for the cellphone you put in your name for your brother. Oops! You didn’t even know he hadn’t paid the account! Now there’s a collection account for $1179 on your credit report and your score dropped over 120 points! Ouch!

For those nasties we can control, I can only emphasize that responsibility for bill-paying is not limited to your rent, your car payment and major credit cards. In the WSJ article, a fellow is quoted as saying his children are prohibited from going to the library anymore; now they can only get books from Barnes & Noble. Well, that’s an immature and irresponsible reaction to an overdue library book fine. Libraries are great institutions and open to all the public. It’s really not that difficult to get a book back to the library on time. And if you can’t, and you return it a few days late, the late fee is literally only pennies.

If that late fee later blossoms into a $40 collection account, well, come on, that’s just plain silly. Show the world you’re a grownup and get that book back to the library. You’ll demonstrate your responsibility to yourself by preventing a stupid collection account, and to your fellow citizens for respecting their rights to use the library unhindered by missing books and service cutbacks for lack of funds.

Now, when it comes to the nasties we can’t control, I think the best defense is good record-keeping. The IRS says we should keep copies of our financial records for seven years. I don’t think that means we should keep every single receipt, statement, and ATM slip we have ever touched. Rather, you need a simple way to reference a bill you paid (or in the case of the Dentist, that your insurance SHOULD have paid) in the event something appears on your credit report five years from now. Maybe keeping your check registers, the copies of the bank statements with your checks (or the actual cancelled checks if you are lucky enough to still get them from your bank!) and an insurance file with the benefits-paid explanation statements. Get a system going, box it neatly and store it in the attic. Update the file folders every month or so.

Dang! Life is complicated enough, isn’t it? But, a little bit of responsibility now—whether that’s returning a book to the library or organizing a basic financial record-keeping system—will go a long way in the future to protect you from those little nasty credit surprises. In the end, it’s the little things that count.