Now that the New Year is upon us, it’s time to make a New Years resolution. Mine is I’ll make at least a weekly post in this blog. There was also something about exercising in there, but I think the unofficial rule is the first resolution counts, and the rest fall under the ‘maybe next year’ column.
So basically, look for a post a week. Unless I pull a muscle lifting weights (probably won’t happen.)
Anyway, today’s topic deals with small Medical Bills you may not know about, and how they can affect your credit score. Typically when applying for credit, there’s a threshold regarding one’s credit score and over the threshold is an automatic approval, and under is an automatic denial. And then, if you’re lucky, someone (me) might go through denials to see why they are denied (and perhaps even overturn the denial.)
The good news here is this: in many cases, the biggest score killer is easily fixed on the borrowers end.
More often than not, the cause of a bad score is an extremely small medical collection, which drives an otherwise good credit score south of the auto-approval benchmark. My clients are lucky that a lazier credit guy (not me) could just leave it declined and move on to the next application. In fact, from talking to peers, it’s clear that an increasing number of my colleagues are not even allowed to do manual overrides.
Most of these medical collections are caused by doctors and dentists that charge a little more than what the insurance companies cover for various procedures. A person often overlooks these bills, assuming insurance took care of the charge, not knowing the collection exists until a collection agency starts hounding them. Even if the person pays the bill, it still shows as a paid collection account and damages their credit score.
So, how can you help me help you?
First, use the automated disputing process offered by the three major credit bureaus. If the company reporting the collection doesn’t respond, the account is removed. This is akin to the cop not showing up for your speeding ticket hearing.
If the company does confirm to the bureaus that the account is valid, you can initiate your own validation process by writing a letter to the collection agency demanding proof of the debt, a copy of the alleged contract bearing your signature, as well as proof of the collection agents authority in the alleged matter. Absent such proof, the collection agency must correct any erroneous reports on the debt.
Better yet, if you get a collection call on a medical bill in the future, negotiate to have the account removed from the bureaus before you pay the account off.
Don’t get me wrong, if you owe money, I firmly believe you should pay your obligations in a timely fashion. I’m just tired of dealing with the pesky medical micro-accounts that are easily and honestly overlooked by people that ordinarily pay their bills promptly.