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Will Your Gym Membership Ruin Your Credit?

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It is perhaps the ultimate of ironies: You join a gym to get fit but leave with a credit score that’s in the worst shape ever.

Deidre set up her health club membership dues to be automatically billed to her credit card, but when her card expired, she forgot about the monthly charge and her membership fee “bounced.” No one contacted her right away, and even though she only fell two months behind, it wound up as a negative item on her credit reports.

Sharing her story on the Credit.com blog, she says she tried to pay the health club the past-due amount but they wouldn’t accept it. She also tried to resolve it with the collection agency, which told her that the account hadn’t yet been turned over to them. “I am at a complete loss about how to deal with this debt,” she wrote.

Another person who got burned was a reader who goes by the screen name “Annla.” She says a collection account for a gym membership showed up on her credit reports 12 years after she canceled it. “Shae” reported a similar experience in which a contract canceled a decade earlier was somehow resurrected as a collection account on his credit reports.

And yet another reader, Katherine, put her membership on hold, only to be billed anyway. This caused an overdraft of her account.

What can you do to ensure your fitness club membership doesn’t destroy your credit?

1. Read and understand your contract.

At the last gym I joined, the salesperson blithely asked me to sign my contract electronically while standing at the front desk. While it may seem convenient, I saw it as way to rush me through signing it as though i were signing for a credit card purchase at the grocery store.

I declined and asked for a written contract to read and sign. When you join a gym you are signing a contract, and it’s crucial that you understand what you are getting into. You need to know:

  • How long am I obligated by this contract?
  • What happens if I decide to cancel? How much notice must I give? Are there penalties for canceling early?
  • Can I put the membership on hold, and if so, what are the procedures?

2. Keep a copy for your records.

Once you’ve joined, make sure you save your contract along with any other  subsequent documentation you get. You can keep all of this in a physical file folder or scan it and save it online. Just make sure you keep it — for a very long time.

3. Document changes.

If you make any changes to your account, such as placing it on hold, adding a family member, or canceling it, be sure to get those changes in writing and keep a copy for your records.

4. Check your credit.

If you do encounter any problems, check your free credit reports to see whether a collection account has been listed. It’s also a good idea to monitor your credit scores, which you can do for free at Credit.com. Just as you probably weigh yourself periodically, checking your credit scores will help you keep tabs on your credit. Is it getting healthier or declining?

5. Know your rights.

If you are contacted by a collection agency for one of these accounts, you have the right to receive a written notice of the debt, and to dispute it. If it’s a very old account — like the 10- and 12-year-old accounts our readers complained about — it should not be on your credit reports. That’s because collection accounts can only be reported for seven years plus 180 days from the date you fell behind with the original creditor (in this case, the gym) before the account was turned over to collections. If an old collection account shows up on your credit, dispute it.

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  • http://www.Credit.com/ Gerri Detweiler

    A Social Security number is not required to report a debt to the credit reporting agencies.

  • http://www.Credit.com/ Gerri Detweiler

    I don’t know why there are two, unless one tried to collect and couldn’t, then sold it to another agency. You’ll have to get your credit reports to find out who is reporting.

    Here’s how to get your free annual credit reports.

    As for resolving it, I don’t have a simple answer for you. Your best bet would be to get the gym to pull it back from collections and allow you to pay them directly. See if a manager would be willing to work with you under the circumstances.

    If that doesn’t work, then you can try to negotiate with the collection agency but they aren’t under any obligation to remove it if you pay it. We’ve written more about that here: Removing Collection Accounts from Your Credit Reports

  • http://www.Credit.com/ Gerri Detweiler

    Hard to say. Who did this? You may want to file a complaint with the Consumer Financial Protection Bureau. (And no, a creditor doesn’t need your SSN to report to the credit reporting agencies. It is helpful but not always required.)

  • Jen

    okay so here’s my question. what happens after 7years. Can they still
    persure it and if you cancelled the gym membership and paid the fee then
    how can they have a collector calling you with a legitimate bill? Esp.
    if its been 7 plus year and you’ve gone and moved around the country,
    and bought a house. Its not shown up on any credit reports… How does
    this debt collector have any leg to stand on?

  • http://www.Credit.com/ Gerri Detweiler

    It’s possible that because you were a minor at the time there is no enforceable contract with you. If your mother signed the contract then they could try to collect from her. That also means her credit can be damaged by the collection account.

    As far as reporting on your (or her) credit reports goes, most collectors report fairly quickly after they pick up a debt. But we also hear from consumers who have a collection account appear on their credit reports several years after the fact so it’s hard to say.

  • Dan Bianco

    What about a situation where you cancel your membership two weeks before your next payment is due but the gym still says they will charge you for the next month… if you cancel the credit card on your account and just don’t go to the gym, do you legally “owe” them? In this situation, they would merely be trying to charge me for something I don’t want and didn’t use.

    • http://www.credit.com/ Credit.com Credit Experts

      What does your contract say? Some require a certain amount of notice of a cancellation.

  • http://www.credit.com/ Credit.com Credit Experts

    Very interesting question. So interesting we explored it in a post here:
    Can a Debt Collector Come After Me for My Ex’s Gym Membership?

    Thanks for asking!

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