Getting credit in today’s economy can be hard because lenders are not willing to take as much of a risk as they were in the past. Having a good credit score is a requirement in order to not only take advantage of good interest rates but also to get a loan at all.
One of the things that can impact your credit score are bills that have gone into delinquency. Medical bills that have been sent to collection agencies can have a quick and dramatic impact on a person’s credit rating. Many with such medical bills might not consider themselves to be at high risk when it comes to creditworthiness. But they need to reconsider.
Even after someone has paid a medical bill, the record of collection can remain on a credit report for years to come, thus bringing down a credit score. According to the Federal Reserve Board, medical bills make up the majority of collection activity on a person’s credit report. It isn’t uncommon for a person’s credit to be damaged due to a medical bill of less than $250.00 going into collections.
This has become such a large problem throughout the nation that there is current legislation before Congress that would make it mandatory that credit agencies delete a collection report from consumer’s credit reports within 45 days of the financial obligation being met. This pending legislation is called the Medical Debt Responsibility Act.
A low credit score truly can limit a person’s opportunities in this country. It’s important for consumers to not only know their credit scores but to understand how and when it can be affected and to take action when they believe something is off.
NPR: “Medical Bills Can Wreck Credit, Even When Paid Off,” Mar. 4, 2012