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  • Medical Bills – How Much Damage Should They Do?

     

    medicalRegardless of the many ways we try to avoid getting ill or injured, with our antibiotic clothing, and our plastic bubble-wrapped lives, sometimes there is just no avoiding it.

    It seems that everywhere I look this time of year someone is suffering from colds or flu and it’s been beaten into our brains as Americans that unless we are laid out on a gurney, we must go on.  So we try.  And sometimes a gurney is just where we end up.

    While this may paint us as stoic, it’s also stupid.  A serious illness or injury can not only keep you out of work for unforeseen periods of time, it can affect your credit report negatively far beyond your illness or injury.

    Here’s 1 scenario- you break your leg skiing with your buddies (alcohol may have been involved).  While not an illness, still winter related and emergency room related and perfect for our scenario, this gives you an idea of what I am talking about.  The ski resort calls ABC Mt. Rescue to get your stupid butt off of the mountain.  You are then transported the the hospital, by 123 Ambulance services.  The EMT’s on both vehicles have notated every minute they have spent with you, every band-aid they have used, every doctor on the other end of the radio at the hospital, now waiting on your stupid butt (oh, yes, you are already on the clock at the hospital). You arrive at the Little Country Inn Hospital which has been on the radio with EMT’s for an hour already, trying to determine how best to reattach your leg.  The E.R. doc consults with the LCIH surgeon who is not an orthopedic surgeon, who is now being flown in to consult on your case. But wait, alcohol may have been involved, so they have to draw blood, and take urine and make certain that you aren’t intoxicated when wheeled into the o.r. to reattach your leg. Now, in the O.R. we have on anesthesia…WOW!!! You have only been stabilized and how many people are billing you?!?

    It is the same with illness or injury and they are interchangeable as to the number of people you will consult with before you are ever even treated.  I have great respect for people in healthcare and frankly think that they wouldn’t be so darned paranoid if we weren’t such a litigious society, but it is what it is and here we are.

    If you have insurance, some or most of these will be picked up.  Ironically, the insurance companies usually have a deal with the providers to adjust the costs so that the patient only pays a certain amount.  The only ones that get billed for the full amount are those without insurance.

    But, I guarantee that somewhere, someone was missed.  And somehow in your pain induced fog they didn’t get your correct billing address or insurance information.  So you never think about until the day you go to buy a house or car the lender runs your credit.

    Now for the $64,000 (your medical bills) question?

    Should these bills go on your credit report?  If they do shouldn’t all of your paid medical bills be on there as well?  Should a credit report be used only as a collection tool?

    As a consumer you have rights and laws that protect you.

     

    What your mother (or father) didn’t tell you about credit.

     

    Every day I speak with clients that truly don’t understand why they can’t get their credit scores above a certain number.  Yes, that pesky little 3 digit number that has become all important to everyone of late.

    The truth is, they were never taught how to get above a “poor” or “fair” score.  These are people that pay on time.  They might be living a little close to the edge, but that is what they have always done.  That is what their parents and friends have always done and the fact is NO ONE TAUGHT THEM HOW TO USE CREDIT TO THEIR ADVANTAGE.

    It is my wholehearted belief that every student in America should go through a program before leaving high school that teaches them what can damage a credit score and what can help.  Yes, the things you do can help.

    Myth #1 – Even if I max out my credit cards as long as I pay it down when the statement comes, it will help my credit.

    EEEEEEE (buzzer sound) While you always want to pay off your credit card debt, what the good folks at the credit bureaus see is this – 90 to 100% usage of available credit on a consistent basis.  While the amount of point that you are LOSING on a consistent basis may vary I have an article from 2009 that I share with every client.  By Jerymy M. Simon for CreditCards.com it has a table in the article that reveales the damage points from common mistakes.  This particular mistake??? For a 680 score 10-30 points.  That is per month/per card.  Add that up!!! Still can’t figure out why your scores aren’t going up?

    Solution:  Pay the debt down until you are no more than 30% of your available credit limit.  Example: for a $1000 credit limit your usage should be no more than $333.  Use the difference to pay cash for things you would normally charge.

    The bureau now sees that you are using your credit and using it responsibly.  Not only is this taken into account by the scoring system, but any underwriter looking at a potential loan for you.

    This is just one of the many things that clients can do to raise scores.

    I’ll be sharing more of these myths in the days to come.  I welcome your questions and comments.

    Have a sticky credit question?  Leave a comment!

     

    Should I use a “Credit Repair” company?

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    We love to read all of the differing opinions that flood the internet from the so-called professionals in investing, money management, debt management, etc.  We sift through articles and websites trying to find the best, most accurate information for you, our clients.

    We do however, have one very significant pet peeve and that is all of those professionals thinking that they know what it takes to do “credit restoration”.  We cannot tell you how many times we will read an article that says that it is so easy a monkey can do it and one recently stated that you fill out a 30 second questionnaire and you could receive your free credit reports.

    Time for the truth ladies and gentlemen.  You have EVERY legal right to request your credit report from each of the big 3 reporting bureaus, annually.  What is not told to you is that it takes approximately 30 minutes, standing on your head while twirling a baton in a counter-clockwise motion…for each bureau!!!  30 seconds my aunt Fanny.

    We also read that it is a good idea to stagger getting all three reports throughout the year to see if there are any discrepancies.  Well, that would make sense if creditors were required to report to all 3 bureaus if they reported to one.  If there is a mistake on Experian and you order TransUnion, you aren’t going to know for a year if there is a mistake is on Experian, (that’s just common sense).  We advise biting the bullet and getting all three reports from whatever of the three agencies you choose every 90-120 days.

    Now you see a mistake on your report (trust us, with the number of errors that is average this is a pretty definitive statement) and you decide to dispute it because you don’t work and have no family or love life and nothing better to do with your time.  You decide to go the route of “on-line” disputes.

    For all intents and purposes, you send this to the bureau, who sends it to the creditor (who gets 1200/day) and they say “Yep, he/she owes it”.  Guess what, you have reached the end of the dispute process.

    However, a Credit Professional knows how to dispute in such a way that we use the laws of the FCRA, the FDCPA and several other consumer protection laws to make certain that you are not stopped before you get started.

    Does removing the reporting of a debt mean the debt is gone?

     

    Oooh?!? Good question!!! Why yes, I thought so.  I really must stop talking out loud to myself, but when these questions come to mind I immediately want to share them with you.  So this is one of those that EVERY client asks me.  And I realized that not everyone knows this.  So today I am going to let everyone in on a little secret.  As with everything else in credit restoration the answer could be “yes” and/or “no”.

    Now, you didn’t really think there was a straight answer to anything having to do with your credit score, did you?  The truth is that there are some rules that can help you know the answer to that.

    First, did you pay the debt? (That is assuming that it was in fact your debt…which is NOT always the case as we have seen) If so, the creditor has no reason to report the paid debt to the 3 major reporting bureaus unless you ask them to do so.  Why would you ask them to do so?  Not all reported debt is bad.  For instance your 5 years of on-time car payments should be reported and stay on your report FOREVER.  So as we see, some debts should be reported.  More on this in another post.

    Okay, you didn’t pay the debt, either because you didn’t know about it or you weren’t able to pay it at the time.  Most people, if asked will tell you that bad credit has to remain on your credit report for 7 years with a couple of exceptions (Chapter 7 BK or Tax debt).

    Pssst, I am going to let you in on a secret, there is no law or statute that states that adverse credit MUST remain on your credit report for 7 years.  That is simply the longest time that it can be reported.  Naturally, a creditor or collection company is going to say whatever is necessary to get money from you, so as stories of Santa Claus and the Toothfairy have become “truth” for some, so has this misinformation.

    Now, back to our question.  Maybe you really do owe the debt but you are able to show that it was misreported. Under the FCRA it must be legally and permanently removed.  Yeah!!!….but wait.  Just because it is not on your credit report, does not mean that it does not exist.

    Other factors can play into whether or not you MUST pay a debt, such as your state’s statute of limitations.  But, it’s always best to take recent debt, especially less than 2 years old, and try to make arrangements for payment in exchange for removal of the item from your credit report.

    Remember that just because you got it removed from a bureau report, the creditor usually has a longer memory.

    We’d love to help you with these and any other credit issues.

     

    You’re wrong if you think “bad credit” only impacts your ability to get a loan.

     

    Okay, let’s face it.  The number one reason that client’s come to see me is because the want some THING. Which is all fine and dandy, but let’s look at the reality of the times.  THINGS will not necessarily put a roof over your head or get you that job you really want. (Okay, a house will, but other than that…)

    Yes, boys and girls, these are the things (lower case, not italicized) of which I speak.  These are the things that provide stability, security and that warm and fuzzy feeling that we all strive for.  Even the most jaded of people out there know of which I speak.

    The one thing that cannot be bought is “peace of mind”.  It can, however, be achieved.

    So, to our topic…does bad credit only impact your ability to get a loan?  The short answer “NO“

    Some of the things that having good or bad credit affect… insurance rates (both auto and home), renters, health and life.  Ability to get a job in fields such as security, law enforcement, government, banking, education, real estate and the list goes on.  Approval for rentals for an apartment (very much in need in today’s market) or rental home.  Emergency repairs on an automobile.  Doctor’s visits.

    There are many other items that are affected by negative credit that I am certain that I have failed to mention.  I am also certain that my readers will let me know what they are and I welcome those insights.

    However, I am going to go out in a limb and say that the number one 1 UNO reason that I recommend for improving your credit score (that pesky little 3 digit number) is “PEACE OF MIND”.  It’s being able to know that if the unthinkable happens, you have the ability, financially to handle it.

    Let us help you reach your goals.  We are here to help!