Can gym balances on canceled memberships hurt your credit score?
What do outstanding medical bills, credit card bills and gym balances all have in common? They can ruin your credit score if they’re not paid.
In 2018, Rachel McLaughlin moved from Raleigh to Virginia. She canceled her gym membership and zeroed out her balance, or so she thought. In October 2022, she went to purchase a car and was told her credit score was much lower than expected.
“The worker was like ‘What’s your credit score?’ I said it should be somewhere from 790 to 805 and it turned out to be the low to mid 700s,” McLaughlin said.
Her lower credit score costs her thousands of dollars more in interest.
“It materially impacted the purchase of the vehicle,” McLaughlin explained. “It cost me close to $3,000 because of that.”
According to the gym’s records when McLaughlin canceled her membership she had an outstanding balance of $79. The debt was eventually reported by the collections agency the gym parted with to the credit bureaus in 2021.
WRAL 5 On Your Side spoke with local attorneys Ed Boltz and John O’Neal who explained that creditors, in this case the gym, and collections agencies are not required to alert a person that they are reporting a debt. They recommend checking your credit report at annualcreditreport.com to get the clearest, most accurate picture of outstanding reported debts.
Right now, you are entitled to a free one every week. https://www.annualcreditreport.com/requestReport/landingPage.action
Once you are alerted to a debt ask the collections agency for a validation letter, that will help you determine if the debt is accurate.
“When you see a debt collector come through that’s really one of the first things you should, especially if it’s unfamiliar or you disagree with it,” Boltz said.
Under the Fair Credit Reporting Act, you have the right to dispute any inaccurate information on your credit report, and they must investigate it.
Finally, read your gym contract to understand what you’re agreeing to and their cancelation policy.
“My advice is understand your contract and maybe ask the question at the time of joining ‘how do I get out of this?’” McLaughlin said.
In North Carolina, a debt can be collected for three years, that timeline usually starts at the first missed payment. In McLaughlin’s case she disputed the debt, and it was removed from her report.
