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Courtsey Jamie Valentino
- My gym sent $187 in unpaid fees to a debt collector for a membership I didn't want.
- I refused to pay the fee for years, but the resulting delinquency on credit report is lowering my credit score.
- A credit expert advised that I try to negotiate a pay-for-delete arrangement with my debt collector.
In August 2018, I opened a gym membership at Blink Fitness' East Village location in New York while dog-sitting in the neighborhood for a month. I immediately asked to cancel it for the following month. The clerk never did. Almost serendipitously, I lost the card attached to my membership while bar hopping and ordered a new one, so Blink Fitness had no way to continue charging me.
However, Blink Fitness claimed I owed them $187 in gym membership fees; I insisted that I had canceled my membership. Your typical "he said, gym said" situation. I've been stalemating with the resulting delinquency on my credit report ever since.
My gym sent unpaid membership fees to collections
For months, I was unaware of any lingering debt I owed Blink Fitness. So, when I started getting calls starting with "Hi, this is an attempt to collect a debt," I ignored them, dismissing them as scams.
But the calls persisted. I realized they were coming from a representative of a legitimate legal office. Though legitimate, the calls weren't any less annoying than the person who wanted to sell me social security.
I tried to explain I did not owe the debt, but the debt collector was only interested in fulfilling their job title. To be frank, I was the type of person who found a way to use every dollar of every paycheck. I lived above my means and then some, so I didn't want to allocate almost $200 for a membership I never wanted or used.
Credit expert and a former employee at FICO and Equifax John Ulzheimer says that the debt collector wasn't the arbiter between the gym and me. They will always take the side of the creditor or service provider.
I didn't pay the debt collector, and after a few months, they stopped calling. I never imagined a pledge to commercial exercise equipment could be upheld in a court of law or this debt could follow me for years to come.
The delinquency brought my credit score down
When I stopped getting phone calls from the collections agency, I thought the matter was over. I only learned that the debt remained stapled to my financial profile when I decided to check my credit report a couple of years later. I noticed my Capital One mobile app allowed me to look at my credit report for free, and I took a peek out of curiosity. Seeing the term "delinquency" made me feel like my credit report had a criminal record.
Delinquencies refer to "a record of mismanagement of a financial obligation," Ulzheimer says, "Delinquencies can range from as minor as being 30 days late to as severe as being in default." Credit scoring algorithms such as VantageScore and FICO count these against you, lowering your credit score.
I had never worried about my credit report. My roommate's father was in charge of our lease, and she had based my reliability on our preexisting friendship. So I had a perfect friendship credit score, but my VantageScore credit score was another story.
When I checked my credit report, my VantageScore credit score was 675. While this score is categorized as "good" by VantageScore, it's on the lower end of the risk category. Additionally, excluding this debt, I have had a flawless payment history. I wasn't sure how far the delinquency had brought down my score, but even over four years since the delinquency occurred, my credit score is still under 700.
I wasn't expecting a $187 fee to have such a significant impact on my credit. Ulzheimer says the amount of money in delinquency is irrelevant to your score. "What is relevant is that a collection account exists and the age of the collection account," he says. The delinquency will continue to hurt my credit for seven years following the date of delinquency, when the payment was first reported as delinquent. After that time has elapsed, the derogatory mark will fall off my credit report.
Though the impact of this delinquency will wane as it gets closer to falling off my credit report, it will continue to affect my credit score until it falls off entirely. It will affect my attempts to rent an apartment, buy a car, or open a new credit card. I'll also be at a disadvantage when creditors decide what interest rates to assign.
A credit expert suggested I try to negotiate a 'pay for delete' arrangement
Unfortunately, there are very few methods of recourse a consumer can take if a delinquency on their credit report is accurate, even if you feel you shouldn't be held responsible by the debt owner.
Your best bet is to go directly to the organization that reported the delinquent payment, the gym, in my case. I tried this to no avail.
Another option that Ulzheimer mentions is a "pay-for-delete" arrangement with your debt collector. "You pay them in full; they delete the collection. Those types of deals are not recognized as being a real thing by the credit bureaus, but they certainly do take place," Ulzheimer says.
These deals are non-binding because of their under-table nature; thus, there's no way to enforce your debt collector follows through. But more times than not, they do because it's a mutually beneficial practice. If they reappear on your credit report after being removed, you'll also be stuck with the delinquency.
In a previous era, a consumer statement explaining the debt might have helped my situation with lenders. But Ulzheimer says consumer statements are only valuable if lenders read them when they pull credit reports. In today's lending world, most credit reports are processed by automated systems rather than people.
After learning that the stalemate is actually a losing battle on my end, I've decided to pay the debt
Initially, I scoffed at the gym's calculated attempt to lawyer me into paying this debt, but Ulzheimer says it's almost always a bad idea not to settle a delinquent payment. While it won't remove the delinquency, you're still legally responsible for any outstanding debt.
The debt owner can sue you for the debt if it still falls within the statute of limitations, which varies by state. They can also continue attempting to collect the debt, though you're afforded certain protections and rights against debt collectors. For example, you can request in writing that they stop contacting you. The Consumer Financial Protection Bureau offers letter templates that you can send your collector.
You have other rights, but they're time sensitive. For example, you can dispute that the debt is yours, but you must do this within 30 days of receiving information about the debt from the debt collector.
I was angry at Blink Fitness for refusing to acknowledge that my debt resulted from their failure to cancel my membership, but my actions were only hurting me. In my reluctance to pay them, I hadn't grasped that I was sabotaging my financial well-being.
After speaking with a credit expert, I've decided to take his advice based on 28 years of experience. I placed a call with my debt collector for a pay-for-delete arrangement. "Hi, this is an attempt to pay a debt."
After paying my debt, the debt collectors said the delinquency should be erased from my credit report when the credit bureaus update their records.
Although my delinquency would have fallen off in less than three years, anything could happen in that time. I don't want this misunderstanding to stand in the way of all the opportunities my credit score can provide me, especially considering my credit score might also affect my partner if we try to get an apartment together in the competitive state of the New York real estate market right now.
For most of us that are not credit or financial experts, half of our financial literacy comes from making mistakes. The other half is taking the appropriate measures to ensure they don't happen again.