Good News For Credit Scores

At a time where I love to look for good news stories to combat all the negativity I’ve seen in the press lately, comes a very good news story for consumers. The 3 major credit bureaus have agreed to overhaul how they handle medical debt in credit reports. I meet with a lot of people who are looking for ways to improve their credit score so that they can buy a car, buy a house, get the nod of approval on a new job or many other reasons. Often, we look at a credit report and the biggest negative is debt from a medical provider. What’s amazing to me is that over half of the debt on credit reports is unpaid medical debt. That is gigantic. 

A few years ago, I had a bit of medical debt on my credit report and it impacted my credit score. I had a significant leg injury (tore 3 of 4 ligaments in my knee during a rugby game) and within 48 hours, I had a visit to an E.R. (I waited a while to see if my team won and then we had a post game beverage that helped ease the pain), a visit to an orthopedic surgeon, a visit to an MRI facility and a month later (once the swelling subsided), I had surgery and lots of physical therapy. As I was rehabbing my knee, medical bills started to roll in.

At the time, I was going through a divorce and the bills went to my ex’s house. She formerly worked for Blue Cross/Blue Shield and understood medical terminology and what EOB (Explanation of Benefits) statements meant so when I would go to the house to pick up the kids after school, she would walk me through what the bills meant and what needed to be done. There were some coding errors that needed to be corrected by an insurance company and resubmitted.

In the time between the bill arriving, my understanding what needed to be done, and me actually making the phone calls during a lunch break and waiting on hold as long as I could before giving up and trying another day….a few of the bills went into a collections status. Eventually, the bills were resubmitted to the insurance company, the providers got paid and my balance was at $0. But…there were several “unpaid/collections” accounts on my credit reports.

It didn’t become relevant to me until we refinanced the house as a part of our divorce. My credit report didn’t look so awesome. I had to report the errors, write letters explaining what happened, and then wait and hope for the best.

Eventually, it all got cleared up and my credit score rebounded. But…what if I hadn’t been refinancing? What if I wasn’t paying attention to my credit score and my credit report?

The Federal Trade Commission estimates that over 1 in 4 people have some form of error on their credit report. I was a part of that statistic for a period. How can you be sure that you aren’t a statistic as well?

  • Go to www.annualcreditreport.com and order a copy of each of your credit reports. You can order all 3 at once or order one now, wait 4 months and order the second and then wait another 4 months and order the final one. With that, you are always 4 months away from your next credit report and you can see progress from one cycle to the next. And, if there are errors on your report, you can spot them earlier than if you bunch all 3 reports together at one time. I set up reminders in Outlook that tell me when to order my next report. Ahhhh…the beauty of technology.
  • Track your credit score!  I use www.creditkarma.com and www.creditsesame.com  to check my score. They have smartphone apps as well. Every time there is a change in my credit score or activity on my credit report, I get a notification on my phone.  One time there was a “new account” alert.  I hadn’t opened a new account!!! I was able to spot an identity theft situation before it even happened. With my name, there are ALWAYS things on my credit report that don’t truly belong to me. The upside is that I’ve never needed an unlisted phone number because even my friends who want my number can’t find me in a phone book.
  • Check your employee benefits. Some employers offer credit monitoring services at a steep discount. I don’t currently use one because I have the services above at no cost and I feel pretty good about my credit monitoring process.

This is my system. You may decide to use a different one. If you implement your own credit monitoring system, stick with it, put in a little bit of effort and focus (combined with the changes from the credit bureau settlement with NY State), you should be able to have a clean credit report and an improving (or simply staying excellent) credit score.

 

 

More like this:

The No-Tracking Budget

The No-Tracking Budget

Putting together a budget is one thing, sticking to it is another ...
Read More
Woman calling for savings account

Why You Should Start Saving NOW

Pretty much every personal finance resource will tell you that the earlier you start saving, the better off you'll be ...
Read More
3 Clever Ways to Trick Yourself Into Saving Money

3 Clever Ways to Trick Yourself Into Saving Money

Here are a few tricks I use to keep me on the straight and narrow when I’m tempted to raid ...
Read More

Subscribe

Be the first to know when new resources are published.