The $47 Cellphone Bill Nightmare

There are countless stories — some of which Credit.com has told — about how a small unpaid bill can make a mess of your credit standing. While there are some big balances that sometimes go to collections before you know about them, like medical bills, there are also seemingly insignificant amounts that cause more trouble than they’re worth (like the time a woman lost her home over an unpaid $6.30 tax).

For one person, it was a $47 cellphone bill.

Reddit user iamacrestkid posted last month about the bill, which had been sent to collections. He (the poster’s gender isn’t specified) left the country two years earlier for work and wasn’t aware of the unpaid bill, and when he returned and set up an account with the same cellphone provider, he heard nothing about the overdue bill. Planning to buy a house in a few months, he checked his credit and saw a collection account for the $47, so he asked the Reddit community how he could get it removed from his credit report.

As he writes in his post, iamacrestkid doesn’t deny that the $47 is his — he would have paid it if he knew about it, and he has no problem paying it now, he wrote — but his concern is getting it removed from his credit report, especially because he’s planning to apply for a mortgage soon. His is a common problem (and his experience shows why it’s a good idea to check your credit well in advance of applying for a loan).

How a Small Collection Account Affects Your Credit

Some of the advice iamacrestkid received included the “pay for delete” concept, a strategy that involves telling the collector you’ll pay the bill if they remove the item from your credit report. Here’s the thing: That usually doesn’t work, especially in recent years, when credit bureaus have cracked down on collections agencies for engaging in this practice. (The idea is that with accurate information removed from credit reports, credit scoring models will not accurately assess the risk a consumer presents to a potential creditor.) Iamacrestkid tried this approach — it didn’t work. Negotiation is certainly a valid option, though. Here are some tips for dealing with your creditors and unpaid debts.

Depending on the scoring model lenders use, a small collection or a paid collection account may not matter: Paid collections do not have an adverse affect on your credit in the FICO 9 and VantageScore 3.0 models, and FICO 8 does not count collection accounts for less than $100. Of course, you don’t know what scoring model a potential lender will use, so the best thing you can do is keep the other aspects of your credit score in good shape and wait for the collection account to age off your report. If the unpaid bill is an isolated incident, its effect on your credit score will diminish as time goes on.

If you don’t believe the small debt is an accurate amount or doesn’t belong to you, go forth and dispute it, but if you rightfully owe it, you’re probably in the best situation if you pay it and move on. After paying, check your credit reports to make sure the account as been reported as paid, and track your credit score — you can get two credit scores, including VantageScore 3.0, on Credit.com — to see how the aging account and other factors are affecting your credit standing. Especially if you’re in a position where you want to take out a loan soon, like this consumer is, you’ll want to do everything you can to improve your credit and, as a result, have a better chance at qualifying for the loan and low interest rates.