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Credit Scores on Medical Debt

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It is a common misconception that unpaid medical bills will not hurt your credit score. Medical debt is the leading cause of bankruptcy in the United States. Health care costs are unsustainable and a short hospital stay could easily ruin the most fiscally conservative person’s finances. The Consumer Financial Protection Bureau (CFPB) is now considering removing medical debt and collections from credit reports.

It is a step in the right direction, but it avoids the real issue of health care costs and allowing Big Pharma, insurance agencies, and hospitals rob the sick. The pricing is so unclear that many hesitate to get care until they’re very ill. Americans know it is common practice to ask for an itemized medical bill and bargain with hospitals for months on end. Over 100 million A report from the CFPB found that 20% of all Americans – 66 million people – are in medical debt.

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“Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” CFPB Director Rohit Chopra said in a statement. “When someone gets sick, they should be able to focus on getting better, rather than fighting debt collectors trying to extort them into paying bills they may not even owe.”

We all know families struggling to pay medical bills. I had a friend whose young daughter fell ill. He managed to accumulate well over $1,000,000 in medical debt in just a few months. The debt uprooted his family’s lives on top of dealing with a sick child, and they were forced to sell their home. Should they be forced to pay a higher mortgage on a smaller home because of their lowered credit score? The medical debt does not indicate in any way that he is financially irresponsible or unworthy of a loan.

Medical debt should not affect a person’s credit score. Credit scores in and of themselves are a topic for another day. Unlike student or credit card debt, people do not choose to take on this debt and are largely unaware of the costs until the final insurance bill comes in. This could be one small step in the right direction, but ultimately, the medical industry must be prevented from robbing the sick.