Your credit score soon will get a buffer from medical-debt wrecks


For many consumers, an unexpected healthcare calamity can quickly burgeon into a financial calamity. Just over half of all the debt that appears on credit reports is related to medical expenses, and consumers may find that their credit score gets as banged up as their body.

Changes in the way credit agencies report and evaluate medical debt are in the works that should reduce some of the painful financial consequences of having a health care problem.

Starting Sept. 15, the three major credit reporting agencies – Experian, Equifax and TransUnion – will set a 180-day waiting period before including medical debt on a consumer’s credit report. The six-month period is intended to ensure there’s enough time to resolve disputes with insurers and delays in payment.

In addition, the credit bureaus will remove medical debt from consumers’ credit reports once it’s paid by an insurer. (Some credit scoring models don’t penalize paid medical debt from any source.)

The changes grew out of two efforts by states to aid consumers: a 2015 settlement negotiated by New York Attorney General Eric Schneiderman and the three credit reporting agencies and an agreement shortly afterward between the agencies and 31 state attorneys general. The changes will be instituted nationwide.

The 180-day waiting period is “a big step forward toward a more equitable process,” said Julie Kalkowski, executive director of the Financial Hope Collaborative at Creighton University in Omaha, Neb., which provides financial education and coaching to low-income, single mothers.

Rather than attempting to collect past-due medical bills themselves, hospitals and doctors’ offices typically engage collection agencies to dun patients. But the timing on when providers take that step varies widely.

“Without a standardized process, some bills get sent to collections because they’re 30 or 60 days past due as opposed to six months,” Kalkowski said.

Kalkowski said several of the women who went …read more

Source:: The Mercury News

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