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Tom Murphy
Help is coming for many people with medical debt in their credit reports.
Starting Friday, three major US credit reporting companies have stopped counting medical debt paid for reports used by banks, potential landlords, etc. to determine creditworthiness. increase. Both companies will also begin offering people six months to a year to resolve delinquent medical obligations sent to the collection before reporting.
Next year, both companies will stop counting outstanding medical debt of at least $ 500.
Both companies say these moves will wipe out nearly 70% of the medical debt listed in the Consumer Credit Report.
Patient advocates call it a major step forward. However, they question whether medical debt should be included in the credit report. This is because many consider medical debt to be an inadequate indicator of whether someone can trust a loan or rent.
"These aren't the ones who bought the shoes they couldn't afford," said Amanda Dunker of the New York Nonprofit Community Services Association. "They went to the doctor because they were ill or needed help with their injuries."
Brooke Davis said in her credit report the fear of breast cancer that had remained for years. Had about $ 1,300 in medical debt.
A 48-year-old McDonough resident of Georgia said it was difficult to rent an apartment and needed a co-signer of a car loan.
"You can't get anything, you can't even get a credit card if you have bad credit," she said.
Non-profit RIP medical debt reduced Davis' debt last fall. However, due to more health problems and unemployment, Davis was returned to debt. She is currently stuck on her swollen knees that cannot be seen by a doctor.
"I'm just suffering because I really don't have the money to kneel," she said.
A Federal Consumer Finance Protection Agency study found that mortgages and credit cards are better predictors of whether someone will repay their debt than medical expenses.
Banks, lenders, and other institutions that monitor financial institutions often do not have time to shop at the best prices when people take care of them and have little control over the progress of the serious situation. It points out that there is a possibility. illness.
Medical billing errors may be reflected in your credit report. And patients may not be sure what they are renting or whether the insurance company will eventually pay for it.
Earlier this year, the agency estimated that 58% of collection and credit record debt came from medical expenses, and overdue medical debt was more prevalent among black and hispanic people. Said that.
The agency is trying to determine if unpaid medical expenses should be included in the credit report.
The bureau's assistant director, John McNamara, refused to estimate when the agency would make the decision. After hearing from all sides about this issue, it can suggest rules to end the practice.
Credit reporting companies are also considering whether medical debt should be left in the report, said Justin Hakes, vice president of the Consumer Data Industry Association.
In March, three national credit reporting agencies (Experian, Equifax, TransUnion) were responsible for the accuracy of their reports, after the agency stated that they would be responsible for them. Announced a change in medical debt.
Patient advocates said these changes would help many people.
By waiting for reports of delinquent debt, patients have time to figure out how to resolve the bill, said Chi Chi Wu, a lawyer at the National Consumer Law Center.
"It gives you more room to do business with your insurer or your provider," Wu said. "Everyone has a story about it."
Many of the medical debts that landed on Melina Oyen's credit report a few years ago were for claims less than $ 500. A Tacoma resident in Washington said her ex-husband lived in an expensive place in Hawaii where she was stationed in the army. They were taking care of her daughter with health problems, including rare conditions that affect her metabolism.
"Zero check accounts with monthly living expenses," she said. "How do you pay a $ 30 invoice if you count $ 5 gas by the next payday?"
The separation package from the military was finally a few years ago. Helped them pay their medical debt. Oyen said her credit score then jumped about 70 points.
But before that happened, they had to deal with higher interest rates on any loan they took, and her sister had to pay them some debt. Only after giving money they could get a mortgage.
"It was embarrassing and very stressful," said Oyen, who is currently working as a patient advocate.
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