Unpaid Medical Debt Unfairly Dinged on Credit Reports

Unpaid Medical Debt Unfairly Dinged on Credit Reports

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ATLANTA -

The credit reporting bureaus may be heavy handed when dinging your credit over medical debt, according to a new government study. If that's you, then you have company. Let's take a look at how big of a deal unpaid medical bills are in America.

According to NerdWallet, a finance blog, last year alone 56 million Americans under 65 had trouble paying medical bills. Hardworking people who've never accumulated debt can fall into it after getting sick and watching bills pile up. Unlike credit card debt which is most likely planned, medical debt is not. When you get sick you don't get to decide how much you can afford to pay.

The Consumer Financial Protection Bureau recently conducted a study on how debt impacts credit scores and it found two big things: First, it shows that after medical debt is paid off, the credit reporting agencies don't bump up credit scores enough. It's over penalized. Second, it says that people with medical debt are not the same credit risk as people who have racked up credit card debt. And that should also be reflected in less of a ding to your score, but it's not.

Something called the Medical Debt Responsibility Act has been proposed for years, but goes nowhere. If it ever does, it would, in part, require that the credit bureaus remove all medical collections within 45 days of being paid off.

If you're in this jam, you are not alone. There is comfort in knowing that folks out there are thinking about how to remedy this. In the meantime, check your credit report. See if there is anything on there that you need to tend to. Don't ignore a past bill. Get on a payment plan - even if it's a little bit at a time.

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