Could Your Gym Membership Ruin Your Credit?

by Miranda Marquit · 10 comments

gym membership

Your gym membership would probably never cross your mind as a bill that could negatively affect your credit report, but maybe you should add this monthly obligation to the list of things to stay on top of if you are thinking about getting a loan soon. While your monthly gym membership payments aren’t going to show up on a report with the three major credit bureaus, your failure to cancel your membership could, in fact, ruin your credit. This could go for other monthly services that you sign up for as well.

Do You Know the Terms of Your Agreement?

One of my friends found out the hard way that a gym membership could ruin her credit. When she decided to stop visiting the gym, she simply instructed her bank to stop allowing the automatic debits from her checking account. She figured that was enough. What she didn’t realize, though, was that the agreement with the gym spelled out specific actions that needed to be taken in order to cancel the membership. On top of that, she had to give 60 days’ notice to cancel the membership. This meant that when the gym didn’t receive its payment, it started reporting her missed payments to a credit bureau.

personal finance gym

She didn’t realize what was happening until the account was turned over to a collections agency a few months later and she received a letter. By then, missed payments had been reported to the credit bureau, and it had been reported that her account had been turned over to collections. She obtained a copy of the membership agreement she had signed and realized her huge mistake. Her credit had been trashed sufficiently to prevent her from getting the best interest rate on a car loan.


Before you agree to anything, you should know the terms of membership. Know how to cancel the right way, and make sure that you jump through those hoops when you are ready to terminate the relationship.

David’s Note: This is especially important now because many gyms are struggling financially because they aren’t allowed to open and some have been charging customers anyway. In fact, I need to ask Emma to speak with the gym membership she belonged to because she told me recently she had to get the credit card company involved in order to get the gym to stop billing her when the gym wasn’t opened.

Non-Credit Accounts Matter, Too

Many of us make the mistake of thinking that utility bills, gym membership payments, and other similar monthly obligations don’t matter on the credit report. This is because when you are paying on time, no one cares — and those payments aren’t reported to the three major credit bureaus. (There are some alternative consumer reporting agencies, like PRBC, that will track your on-time, non-credit payments if you pay a fee for the setup.) However, if you miss payments on a regular basis, non-credit billers can decide to report the delinquency to the credit bureaus.

The information falls into the category of payment history — the most important factor of your credit score. Since your score is based on information in your credit report, having these negative items in your report can lead to a lower credit score and all of the consequences of a less than desirable credit history. This means that it’s vital that you pay your non-credit obligations on time. The utility company may not report you after one or two late payments, but the company may decide to do something about it if you make it a habit. And if you have enough missed payments, your account might be turned over to collections, which is another problem altogether. Of course, they will cut your utilities too, which can be pretty inconvenient. It can also be life threatening, say if the gas company cuts off gas to your house and it’s the middle of winter.

The Bottom Line

The extra money my friend now needs to spend on a higher car loan comfortably covers the gym membership’s costs and more. This is on top of the headache of having to deal with collections, and possibly not being able to qualify for a low rate on a home loan if she were to buy one in the future. And who knows whether she will lose an opportunity at a future job because her employer decided to pass on her without letting her explain the situation if they check her credit report. Don’t make a careless mistake like her because it might snowball into a disaster.

Even your non-credit accounts can ultimately affect your credit score if you don’t take proper care of them. Understand the terms and conditions associated with memberships and other non-credit accounts, and abide by them. This is especially true if you decide to cancel. You never want to leave the other side hanging, because they could make it a priority to ruin you.

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current Verizon FiOS promotion codes and promos to see if you can save more money every month from now on.

{ read the comments below or add one }

  • Dan says:

    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.

    • David @ says:

      It all depends on what your contract/agreement says. It’s perfectly legal if that’s what you agreed to, but having to give advance notice is so frustrating.

  • Jason says:

    Of course they reported it! You can’t just stop paying a monthly membership and not say anything. Seriously, what did she think would happen?

  • Justin says:

    It’s insane how hard it is to get gyms out of your finances. Out of 4 different gym memberships at various points in my life only one has made it easy, and that one was a small chain of three locations, the other mega-gym chains all made it hell.

  • Mike says:

    Seems like common sense to me. If you have to cancel your membership, walk in and be upfront about it. Don’t be passive and just stop paying. Oh, and reading the T&C’s is pretty much common sense too.

  • Adam says:

    This is an unfortunate scenario, but all too common, and a good wakeup call to us all.

  • B Kelly says:

    never in a million years would I have believed this is true – but sadly it is. Seems like there are many leakages in the system that can have an adverse impact on our credit score…

  • RoadOutOfDebt says:

    Marketing has brought us to a point where we believe is essential to have a premium gym membership instead of enjoying the benefits of running in the park, or Tv cable and subscriptions to magazines and newspapers. Most of these are thrown away money since today you can find a lot of information and entertainment on Internet.

  • Alexis says:

    I canceled a gym membership per the company’s directions when I moved out of state many years ago. Per the contract, I could only cancel if I moved to a location more than 30 miles from an affiliated facility. I moved to a town that was a 2 hour flight from the gym’s closest affiliate and yet the company insisted that I was in breach. I attempted to explain basic geography to them over the phone and refused to pay another cent. They retaliated by reporting my “breach” to the credit reporting companies. Several years later, when I sought to buy my first home, it came up and I was asked to explain what happened. The banker laughed at the story and told me that it happens a lot. The lesson I learned from this experience was to never join another gym. I cannot believe that I was reported for not wanting to fly 2 hours each way to go to their gym which was outside the area of their contract terms. Ridiculous.

  • Joe says:

    I don’t mean to be mean, but what’s wrong with your friend? She honestly didn’t know that you had to notify someone she’s making payments to that she wanted to cancel her membership? How are her finances not in worse shape?

Cancel reply

Leave a Comment