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Will Your Gym Membership Ruin Your Credit?

Gerri Detweiler

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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