Not a Verizon fan
August 31, 2009 9:43 PM   Subscribe

A response to a previous AskMefi question regarding early cancellation fees for cell phone service implies that nonpayment of these fees does not get reported to credit agencies? Is that true and if so, why?
posted by sarelicar to Grab Bag (8 answers total)
I saw the response you mentioned, but it must vary by carrier, or else M.C. Lo-Carb! got very lucky. My daughter had a ding on her credit report from an unpaid cell cancellation a few years ago (through Cellular One), and she ended up having to clear it up before she could get a car loan.
posted by amyms at 10:40 PM on August 31, 2009

Has to do with the Fair Credit Reporting Act, I believe. Companies have to go through a certain procedure to ding your credit legally, or else face penalties that aren't worth it for them in some cases.
posted by Kirklander at 11:18 PM on August 31, 2009

Have you tried to convert to a cheaper plan - rather than cancelling the Phone account? A few years back I needed to cancel a phone as I was leaving the country but instead converted it to like $7 a month contract and paid that for the remaining 6-9 months. it was considerably cheaper than a proper cancellation. - you just have to remember to cancel the phone 6 months later when the contract term has expired.
posted by mary8nne at 2:52 AM on September 1, 2009

Sarelicar -- yeah, I got lucky. I've tried to pin down an actual answer for this several times, because I was as surprised as you, but I never could find any specific rules or guidelines regarding cell phone early termination fees and credit ratings. My guess is these companies (Qwest, T-Mobile and MCI) just didn't go to the hassle and cost of sending my ETFs to a collection agency. I should have clarified that I don't recommend people neglect their debts -- I just threw that in there as a data point.

Credit and credit ratings are fascinating. I used to believe, for instance, in the old 7 year drop-off canard, but when I bought a house a few years ago, I couldn't believe I had to pay off a 12-year-old ambulance ride debt from my deadbeat 20s.
posted by M.C. Lo-Carb! at 6:57 AM on September 1, 2009

Dang, I was hoping some credit guru would step in with some new loophole that would prevent me from having to pay Verizon when I finally cancel with them, ha...ha.....ha. I already have the account on suspension which leaves me with only $15 a month to pay, but you can only do that for 3 months and twice in 3 years or something.

I will investigate my cheapest plan option with them and see if it will cost less (over the 15 months left in my contract) than just canceling outright ($250).

Thanks all. And if there are any credit gurus out there with magical loopholes, chime in!

Also...sidenote - just remembered this right now - I canceled with Cingular about 4.5 yrs ago before it switched back to AT&T and blew off the cancellation fee (also do not condone recklessly blowing off debt, yada yada).

So I just bought an IPhone (AT&T being the carrier) and when we got to the credit check part I was sure he was going to bring that up. But he didn' maybe the cancellation fee is something of an empty threat? Suits me since I think the very concept should be illegal.

Anyhoo, back to Scrabble on my shiny new IPhone.
posted by sarelicar at 7:26 AM on September 1, 2009

You should be aware of what is actually on your credit report. The credit bureaus are required to provide you with a free report once a year:
posted by doomtop at 7:35 AM on September 1, 2009

FWIW, I'd trust Verizon about as far as I could throw them when it comes to this kind of thing. Several years ago, over the course of about six months I canceled three land lines with them (they were no longer needed).

In every case, despite there not being an overdue balance or any history of slow payment, they turned the remaining balance on the account over to a collection agency -- several weeks before the payment was originally due, in fact.
posted by nonliteral at 8:52 AM on September 1, 2009

Just to clarify something said above, negative marks cannot appear on your credit report after 7 years from the Date of First Delinquency. Large mortgages can be an exception to this, as in some cases they can pull a full credit file. I haven't been able to find details about when and where that is allowed.
posted by mad bomber what bombs at midnight at 9:20 AM on September 1, 2009

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