Steadily increasing medical costs have caused Americans to feel the burden of medical debt more than ever before. The way medical debt affects credit reports—some debt can remain on a report for up to seven years—has congress considering the Medical Debt Relief Act.
Introduced by Senator Jeff Merkely of Oregon, the Act would require unpaid medical debt under $2,500 to be removed from credit reports 45 days after it has been paid. Advocates of the Act argue that medical debt is not an accurate indicator of a consumer’s creditworthiness.
• Any unpaid debt that is sent to a collection agency can dock a consumer’s credit score by up to 100 points.
• Consumers whose credit ratings have suffered because of medical debt are often paying higher interest rates and fees because they can’t pay their medical bills on time.
• Credit records often show that consumers who have settled or paid their medical bills after they have gone to collection are more creditworthy than their credit score might indicate.
Previous efforts to pass similar legislation haven’t made it past committee. This time, advocates of the bill have appealed directly to Sen. Tim Johnson and Sen. Michael Crapo, members of the Committee on Banking.
Click here to read more about the bill.