New Changes Could Affect Your Credit Score…For the Good!

The three major credit reporting agencies announced Monday some sweeping changes in the way they report bad debts and it has to do with medical debt.  In an effort to improve credit reporting and relieve pressure from regulators, credit reporting agencies (the 3 companies that hold your credit reports and scores) knew that they had to do something.

Medical debt has been problematic.  Doctors office would automatically report negative ratings without giving the process time to work.  Now, the early reporting won’t have that negative effect.

Now the credit reporting agencies will be required 180 days before reporting medical debt to allow for the insurance companies and doctors to pay.

Also, existing medical debts that ended up in default that were eventually paid will be deleted from credit reports.  That would be a huge boost to a person’s credit score.

These new changes come on the heels of FICO’s announcement last August.  They announced that they would change the credit scoring formula to where negative marks from medical debt will not have as bad of an effect on a credit score.

There were some other changes.  However, I would consider them “fluff.”  Credit bureaus also said people who contest items in their credit reports will receive additional instruction on what to do in the event the dispute didn’t go their way.  They are also going to use credit investigators instead of an automated process to look into disputes. 

Finally, the three credit reporting agencies will get rid of the reporting of debts that didn’t arise from a consumer contract or agreement.  That would include such things as tickets and fines.  

So how can you benefit from this?

As a good rule of thumb, if you have a medical procedure done, double check with every provider and make sure closure is put to all billing and stay organized with billing and who is paying what.   

If you have paid defaulted medical debt that has been paid, go ahead and submit a request to remove it from your credit report based on these announced changes. 

If you have medical debt that you think anything is wrong or in error, dispute it based on these changes.  You have nothing to lose.

If you have ridiculous negative remarks from tickets or library fines, dispute them requesting that they remove them based on these new announced changes.

Finally, how you go about disputing items is now much more consumer friendly once they switch to humans versus an automated process.  Just make sure you present a very detailed case informing them why your item should be corrected or removed.

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