Crazy But True: Overdue Library Books Can Hurt Your Credit

You probably wouldn’t imagine something as simple as an unreturned library book or movie would hurt your credit. After all, you only kept the books out a few days past the date. But, libraries around the country are turning to collection agencies to handle fines that patrons neglect to pay.

You probably already know how the library system works. When you check out something from the library, you agree to return it by the due date. A small fee is charged for each item you keep beyond the due date. After a certain amount of time, sometimes 30 days, the library stops charging the daily fee and instead charges your account for the full price of the unreturned item. You’re required to pay your fine, even if you don’t check out anything else from the library again. In the past, library’s just dealt with these unpaid fines. But, these days, they’re hiring collection agencies to recoup the thousands (sometimes tens or hundreds of thousands) of dollars they’re owed.

Don’t ignore your library’s threats to send you to a collection agency. Or a collection agency’s threats to report the debt to the credit bureaus if you don’t pay up.

You probably don’t have to worry if you just owe a few dollars. Libraries will usually only send your account to a collection agency if the amount owed above a certain threshold. The New York Public Library, for example, uses collection agencies for borrowers with fines over $50. Alexandria Library, in Virginia, enlists a collection agency for accounts with balances of $25 that have been past due for 60 days or more. You can always check with your library to see their collections policy.

Having your library fine sent to a collection agency isn’t the worst part of the collections process. You might have to pay a small collections fee. But, on top of that, if the collection winds up on your credit report, it could damage your credit score. A recent version of the FICO score, FICO 8, ignores “nuisance” collections under $100. However, there’s always a chance the creditor pulling your score with is using a different version of the FICO or another credit scoring calculation, one that does consider these low-dollar collection accounts.

Keeping your library fines out of the hands of a collection agency is easy enough, return your past due materials and pay whatever fine you owe. And, if you’ve lost the items, you can pay for them. Many libraries now provide email notifications that let you know when your borrowed materials are coming due, when they are past due, and when you have a fine. Make sure your library has your updated contact information so you're aware of any fines you owe.

If your fine is so high that you can’t afford to pay it in full at once, ask about payment arrangements. Paying your fine down may keep it out of the hands of a collection agency and off your credit report.

Sources: New York Public Library, Alexandria Library, myFICO