The Kitchen Table

The arrival of September is a welcome event for those of you dealing with outstanding healthcare bills. Starting on the 15^th of this month, Experian, Equifax, and TransUnion are all going to implement a 180-day waiting period before including medical debt on consumers’ credit reports.

The idea behind the grace period, is to allow patients time to handle any medical disputes with insurance companies/providers. These disputes often cause delays in payments, which show up on a consumer’s credit report as a medical collection. Another big change that will be taking affect this September is that the major credit bureaus will also be removing medical debt from consumer’s histories once the bill has been paid by insurers.

The driving force behind these modifications, has to do with the long term financial effects of an unexpected medical bill. We are often caught off guard when it comes to the cost of healthcare, and it can quickly spiral into a massive financial burden. Past due payments decrease your credit score, and once that happens you have a harder time borrowing money, or you are borrowing money at higher rates. All of which equates to higher automobile and mortgage loan payments. Having those higher payments on the money you borrow makes it harder to save money, which in turn means you won’t have an emergency fund established to aid you when you are hit with an unexpected medical bill…see the problem?

Medical debt affects a huge part of the American population. According to the Consumer Financial Protection Bureau, for about 15 million consumers, medical debt is the ONLY source of negative activity on their credit reports, so having a 6-month waiting period when dealing with medical bills should help people avoid damaging their credit score. That could mean the difference between seeing your dreams blossom into reality, or watching those dreams wither on the vine.

*Employees of LPI Loans and our affiliates are not attorneys and LPI Loans DOES NOT provide any legal advice and users of this web site should consult with their own attorney for legal advice.