Changes to How Medical Debt Affects Your Credit Score
Your credit score is a critically important factor in your financial life. It is often the determining factor when you apply for a credit card or home loan. There are many things that affect your credit score including your payment history, the amount you owe to creditors and the type of credit you have. Unpaid medical bills are a type of debt that can negatively impact your score.
Medical debt is often unavoidable and usually arises from the worst of situations; someone’s poor health. Many Americans have trouble keeping up with their medical bills. The National Center for Health Statistics, part of the Centers for Disease Control, released a report showing that in 2012, 25% of United States families had a hard time paying their medical bills. Even those surveyed that were covered by medical insurance often struggled with these debts. One in ten of those surveyed had medical debt that they could not afford to pay at all.
Medical debts can wreak havoc on your credit score and some think that these debts are weighed too heavily against consumers. So, FICO, the most popular credit scoring system, is doing something about it. Later this year they will change the way medical debt affects a consumer’s credit score. Specifically, if a consumer’s only major unpaid debt is medically related their median score will be boosted 25 points. This is a huge bonus for the consumer who does their best to stay on track with their bills but is in the unfortunate situation of being unable to clear up their medical debt. This will allow creditors to see the consumer in a better light and lead to the extension of credit to worthy applicants more frequently.
Of course, clearing up your unpaid medical debt is the best way to boost a credit score that is lagging for this reason. If you have medical debt and need help negotiating a manageable payment plan with creditors or collection agents, the attorneys at Fitzgerald Campbell can help. Call (866) 927-8289 or email us at Info@debtorprotectors.com.