Almost 1 in 6 credit reports contain a medical debt collection, according to the Federal Reserve.
Collections are considered a derogatory item and will hold the most weight when it comes to affecting a credit score (30%). So if you have a medical collection, it will negatively affect your score and could change whether you qualify for a mortgage or not.
John Ulzheimer, president of consumer education at SmartCredit.com says:
"It’s easier to keep something from going to collections. It’s a lot harder to get collections off your credit report." He is right. But, if you have a looming amount of medical debt, this may be easier said than done.
What you should do:
- Have us do a free credit check-up for you, we can tell you if you have any collections
- For large medical bills, agree to a payment plan
- Pay or settle on the smaller bills
- Avoid financial traps - Never use a home equity loan to pay expensive medical bills. This type of loan can put your home at risk if you are unable to pay. Also, do not forgo paying your mortgage to pay a medical bill. Instead, call the hospital or collection company and set up payment arrangements.
Can Congress help?
Congress is considering the Medical Debt Responsibility Act, proposed legislation that would require medical bills to be removed from credit reports 45 days after they are paid, provided the original amount is $2,500 or less. It has bipartisan support, but has been slow to make its way through the legislative process. The Consumer Financial Protection Bureau is also examining the issue.
Until then, if we can can answer any questions, please let me know!
Until then, if we can can answer any questions, please let me know!
Have a great weekend,
