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Decades-old Parking Tickets Being Used to Ruin Credit Ratings
Revenue-hungry municipalities are turning to collecting on old parking tickets to generate millions.

Experian, Equifax, TransUnion
Cities of all sizes, from New York to Toledo, are turning to private collection agencies to profit from old parking tickets, speeding citations and other fees and fines. The New York State Thruway Authority, for example, will turn over any unpaid E-ZPass bill to a collection agency. In turn, the agency will threaten to destroy the credit ratings of motorists in order to collect on alleged debts that can be as much as twenty years old. Even a tiny municipal fine reported to a credit bureau, can haunt a credit report for seven years and knock 100 points or more off a credit score -- a devastating blow to an otherwise good credit rating.

"It's a very serious negative item on your report, on par with a tax lien or a bankruptcy," Maxine Sweet, vice president of public education at Experian told the Wall Street Journal. "You will definitely pay more for your credit, in higher interest rates and higher down payments."

Cities are eager to pursue these old debts, but they don't pursue old crime. In Rhode Island and Texas, for instance, the law prevents an individual from being convicted of most crimes three years after they were committed. A five-year statute of limitations applies to serious crimes like theft, burglary robbery and kidnapping in Texas.

Hardball collection tactics are proliferating because collection agencies often advertise their services to cities for free because they can reap a significant bounty for every payment they receive. Capital Recovery System, for example, adds a 30 percent charge to the motorist for collections it makes on behalf of the city of Toledo, Ohio. So far, it has collected $450,000 in tickets that are up to twenty years old. The company pocketed $97,000 for its efforts.

Source: A New Threat To Your Credit Rating (Wall Street Journal, 1/3/2006)

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