September 22, 2021

Medical Debts to be Removed From Credit Reports

With the terrible economy, high unemployment, and loss of health insurance,  there are lots of people who have their credit score negatively affected by medical bills.

This is happening more and more considering the fact that the United States economy has been in disarray for the past several years. People are constantly struggling to get ahead and medical bills being listed as blemishes on a credit record can stop people from reaching their full potential.

There has recently been a proposal by Rep. Heath Shuler that would require that the three credit reporting agencies delete any medical debt of up to $2,500 within 45 days of the bill being paid off.

Right now when you have a medical debt it stays on your credit report for seven years even if you pay it off before then.

The bill has not yet been sent to the Senate, but supporters of it are hoping to see it voted on as early as the fall. If this is approved there are many people who would qualify for loans and credit cards that they were not formerly eligible for.

Opponents of the bill feel that taking medical debt off of credit reports gives credit card companies a false impression of the type of person that they are lending it to.

The main reason why credit reports are checked are so that lenders can see if the borrower usually pays debts back in a timely manner. Opponents feel that not having medical debt available on a credit report will lead to lenders not being paid back when they should.

While that may be a valid point, there are many people who cannot pay back bills right away because they have illnesses that require them to seek expensive medical treatments on a regular basis. Supporters of the bill feel like these people should not have a problem qualifying for mortgages and things of that nature because of something that is beyond their control.

In CNN’s coverage, a consumer credit specialist weighed in on the topic and he says that he believes the real problem is the fact that hospitals are not working with their customers enough to figure out why they have fallen so far behind.

Read more:
CNN Money
Unpaid Medical Bills Can Ruin Your Credit
Unpaid Medical Bills Can Negatively Impact Credit
How Medical Bills Affect Your Credit

FTC Keeps Watch Over Credit Report Accuracy

Good news! You’re not the only one looking out for your good credit. Since 2004, the Federal Trade Commission has been monitoring credit reports and seeking information from consumers regarding errors.

According to the FTC’s December 2010 report, the study will be the first to directly engage the three main groups in the credit reporting process: consumers, national consumer reporting agencies, and furnishers of information to the reporting agencies. Approximately 1,000 consumers, randomly selected throughout the nation, will review their credit reports from all three national credit bureaus with an expert, who will help identify potential errors on their reports. Participants will be encouraged to dispute errors that could affect their credit standing, and credit reports with alleged errors will be sent to Fair Isaac Corporation (FICO) for rescoring. The study will estimate the proportion of consumers who would find one or more material errors in their credit reports, and it will reveal the main types of errors, their frequency, and their impact on a consumer’s credit standing. Overall, the study will categorize errors by type and seriousness in terms of potential consumer harm.

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Reading Your Credit Report and Understanding Your Credit Score

One of the basic steps in repairing your credit and taking charge of your financial life is accessing and understanding your credit report and credit score.

Not only can poor credit weaken your chances for getting a loan from a bank or lender, but it can also impact your employment and approval for various service providers—think utility company, landlords and rental properties, and more.

Reading Your Credit Report

Thanks to the Fair Credit Reporting Act, enacted in 2001, you are eligible to request a free credit report once each year from all three national credit reporting agencies: Equifax, Experian, and TransUnion.*

Your credit reports contain a summary of your credit accounts, detailed account histories and important personal information. Review them carefully and note any discrepancies you find in the following information:

  • Personal identifying information, including birth date, address, social security number
  • Credit and loan accounts, which will include both open and closed accounts
  • Account histories for each credit line and loan, including the original loan amount, the date it was opened, date it was closed if applicable, the current balance owed, minimum monthly payment required, notice if the account is delinquent or past due, and a payment history.
  • Collections summarizes any account that might be in arrears and turned over to a collection agency.
  • Public record, which could include information such as a bankruptcy filing or arrest record.

What happens if you find incorrect information? According to the Fair Credit Reporting Act, you have a right to request that both the credit bureau and the lender that provided the inaccurate data correct the information. Send corrections in writing to both and make sure to include any documentation you can – statements, cancelled checks, payment confirmation numbers, etc.

Your Credit Score

Don’t confuse your credit score with your credit report. Your score is calculated using a financial algorithm and the data culled from your credit report. Banks and lenders use credit scores to measure your debt risk and to determine how much they will charge you to borrow money—think interest rates and additional fees for example.

Since your credit score is calculated using the data in your credit report, you might see why reading your report and reporting any errors could deeply impact you financially.

So what’s a good credit score and what’s a bad score?

Most financial experts suggest that 700 and above is a good credit score, while anything below 600 is poor, at best. If you’re not in the above 700 realm you can improve your score by making prompt payments on your accounts and curbing any irresponsible spending and financial habits that could be contributing to a poor credit history.

*To request free credit reports visit www.annualcreditreport.com. This is the only FTC authorized site. Beware other sites that promise “free” reports then charge you fees.

For more information, visit http://www.idcredit.org/