Editorial Policy

Forgotten gym dues likely won't ding credit

Erica Sandberg

March 6, 2015

QHi Erica,

I have a problem that I'm hoping you can help me with. I had to close one of my two credit cards due to a case of identity theft. Somebody I don't know used my card. There was nothing on this card, but I had an automatic monthly charge for my health club that I utterly forgot about. I thought it was on my other card, so I didn't even think about it.

Today I got a phone call from my health club saying I am three months behind on my membership, and I now owe $330! I am so embarrassed. I have been going every week; I don't know why I just found out about this now! I am a very responsible person and never pay bills late, ever. What did this do to my credit? It was truly an honest mistake. –Gail

ADear Gail,

Deep breaths! Everything is OK. You did not destroy your credit rating, and I'll bet that you are still on fine terms with your health club. Here's why.

When you canceled the card that was on file, you did stop regular transactions from going through. However, your card issuer had nothing negative to send to the credit reporting bureaus. Because of the automatic bill pay system, the last bill the issuer received from the health club was satisfied in full. No unpaid debt was left dangling.Ask Erica

The health club, however, did not get paid. That means you owe the club, which is a far better situation than inadvertently owing a balance to a credit card company. Had the debt racked up on your card with no payments for months, the issuer would have notified the credit reporting agencies of your delinquency. By this point, you'd have at least a few late payments showing up, damaging your credit rating. Thankfully, this is not what happened.

In general, gyms and health clubs do not report to the credit reporting agencies unless they sell an outstanding balance to a collection agency. Since you got a call from your club and not a collector, you're in a perfect position to clear up this mess right away. Call them back and make a payment in full.

Just don't wait too long. If you do, the club may sell the bad debt to a collection agency, and at that stage you would have a genuine credit problem. Most collection agencies subscribe to the three credit reporting agencies. Evidence that an account has gone into collections does not reflect well on your credit report or scores.

Before you relax too much, though, I do want to make sure you've taken the right protective measures. Because you were a victim of identity theft, it's important to follow proper protocol so you don't suffer future fraud. Here are three steps you need to take:

  1. You did the right thing by canceling your card. Soon you'll receive a fresh piece of plastic with different numbers, and if you want to add the health club dues to it, do so. In the meantime, if you haven't already, file a report with the police. Even if the crime was minor and you have been reimbursed for any unauthorized charges, it will help the police conduct detective work. An identity theft report is also helpful for the next two steps.
  2. You need to check your credit reports for errors. Go to AnnualCreditReport.com and check for free. Look for incorrect addresses and accounts you don't recognize. Find errors? Dispute them immediately by mail, rather than online, because you can lose some rights when you dispute online. Here are the mailing addresses for disputing errors with the three major credit bureaus, TransUnion, Equifax and Experian. Include a copy of the police report and any other supporting documentation.
  3. Finally, add a fraud alert to your file. When you file with one credit bureau, it will alert the other two. Simply alert TransUnion, Equifax or Experian. Your credit has been compromised, and if someone was to try to open a new account in your name — or extend a credit line or request additional cards be sent — the lender would be forced to contact you for verification. You may choose the 90-day or the seven-year alert (which requires a police report). If you want to go a step further, you may freeze your credit, which shuts down most access to your file. In the event you want to apply for a loan or credit card, however, you'll have to “thaw” it with a code first.

As for feeling ashamed when you check in, you needn't be. Aside from it being a genuine mistake, the front desk employees probably have no idea that you were ever behind. If they were, they'd have mentioned it by now. So don't sweat it!

Got a question for Erica? Send her an email.