Lynch Law Offices, P.C.
Call Us Now for a FREE Consultation:
800-491-7493
Offices in Four Convenient Locations

Your mama done tol' ya ... to maintain a good credit score p2

At least 25 years ago, a friend tells us, she was out to lunch with a business acquaintance. The check came, and they figured out how much each of them owed. As they rifled through their wallets for the right combination of ones, fives and tens, the colleague mumbled, "You know, it's just paper, but it rules our lives."

Cash is still important, but nowadays we would argue that credit rules our lives. A credit score is just a number, but it can drive up the interest rate on a mortgage loan and put the kibosh on a new credit card. And the formula used to calculate a credit score varies from one credit company to another. All we really understand is the big picture: debt from revolving credit accounts seems to do more harm to a credit score than secured debt. Credit card balances bad; home loans not as bad.

But where do outstanding medical bills fall? Medical expenses are almost entirely out of our control, so why should our credit scores suffer? It is an issue that must be addressed, considering that more than half of all collections noted on credit reports have something to do with medical expenses.

The Consumer Financial Protection Bureau believes that credit bureaus give too much weight to medical debt. Credit scores take a tremendous hit -- 10 or 20 points, according to CFPB research -- when medical debt and other types of debt are treated as equals. Even in cases where medical debt is treated differently, it still stays on a credit report for seven years after the debt is settled. The scoring models must be overhauled.

We will discuss how things are beginning to change for the better in our next post.

Source: CNBC, "Credit alert! Unpaid medical bills unfairly hurt scores," Herb Weisbaum, May 21, 2014

No Comments

Leave a comment
Comment Information

How Can we Help You? Contact An Attorney

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Four Convenient Office Locations To Serve You

Toll Free: 800-491-7493 Fax: 888-691-8337

Five Convenient Office Locations To Serve You

Lisle Office - DuPage County
1011 Warrenville Road
Suite 150
Lisle, IL 60532

Map & Directions

Lockport Office - Will County
900 South State Street
Second Floor, Suite A
Lockport, IL 60441

Map & Directions

Aurora Office - Kane County
1444 North Farnsworth
Suite 100
Aurora, IL 60505

Map & Directions

Palatine Office - Cook County
800 East Northwest Highway
Suite 700
Palatine, IL 60074

Map & Directions

Chicago Office - Cook County
1 S Dearborn
Suite 2100
Chicago, IL 60603

Map & Directions

Toll Free: 800-491-7493 Fax: 630-960-4755