If you read our previous blog discussing medical debt, you were probably shocked to find out that more than 43 million Americans are suffering from unpaid medical bills, and their credit reports are showing it. The only options now seem to be either to deal with the consequences of bad credit, or to invest in credit repair services that are designed to fix their credit score. However, with nearly 20 percent of all adult Americans bearing some form of unpaid medical debt, the government has taken a good look at what impact this health-related debt has on the average American’s credit score, and whether or not that weight needs to be changed.
In a December 2014 article released by the Consumer Financial Protection Bureau (CFPB), the federal government took a deeper look into medical debt and its effect on credit and collections, and this is a summary of their key findings:
- Almost all collections tradelines are caused by unpaid bills.
- More than half of all collections tradelines are medical.
- There are no objective standards for creditors to report debt.
- There is no room for reporting specific circumstances that a certain consumer is undergoing.
- Medical bills and insurance reporting is not regulated, so they are a source of confusion for many people.
- A large percent of those with unpaid medical debt show no other signs of financial stress and have a history of paying bills on time.
These findings prompted a reevaluation of how the credit bureaus view medical debt, as the CFPB recently proposed rules that would improve best practices for the medical industry on how they report their collections tradelines. By limiting the time they can report debt and standardizing the way they inform consumers of that debt, the credit bureaus hope to eliminate the confusion and excessive, damaging effects that medical debt has on credit scores across the nation.
Learn more about the impact of your medical debt on your credit score by contacting our credit repair experts at Empowerment Financial Group today. It’s time to have a credit score you love.