The Shocking Cost of Medical Collection Accounts On Your Credit Reports

Gerri: What do you think the prospects are for this (legislation), Rodney? And anyone who’s listening and has dealt with medical bills, what can they do?

Rodney: Go to my website and look up the Medical Debt Responsibility Act and contact your local Congressman, your US Congressman and your US Senate office and call them all. And the reason being is, we have big momentum behind the bill.

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Let me give you an example of (why this is important). Let’s say you and your husband have a mortgage on your home. If you pay your payment on time, you’re rewarded with good credit. And if you make a late payment, you’re penalized with bad credit. The problem with medical (bills) is, these items are never reported if you pay on time. They’re only reported and sent to the collection agency for negative credit. And a lot of times, insurance companies are still fighting with medical providers and then it ends up on your credit and it costs you a lot more money when it comes to borrowing money.

Gerri: Under the current system, if a medical bill goes to collections and is reported, even if you pay it, that does not improve your credit scores. A paid collection account is just as serious as another collection account. So I imagine you have clients that come in and say, I’ll pay it, let’s clean it up and they don’t realize there is nothing they can do.

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Rodney: Yes, most people. And they are willing to pay it and I’m not talking about people that just don’t pay their bills on time. People that have managed their credit (well for) a long time. One lady said it best, “I didn’t realize when my son got sick my credit was going to get sick with it.” So many people are penalized unfairly.

Gerri: This is nothing to be embarrassed about. It can happen to anyone. You go in for surgery, you get the the bill from the anesthesiologist and the hospital but you never get the bill from the laboratory that did the lab test and you don’t know (about it) until it’s in collections.

Rodney: I saw one the other day Gerri, the gentleman made $1.3 million and he had a $30 medical collection on his credit report. It dropped his score 85 points and he had to pay a fee to get his mortgage of $4,200. Yes, you would think that somebody that makes $1.3 million dollars wouldn’t (fail to) pay a $30 bill when all their other credit was absolutely perfect.

Listen to or download the podcast of the full 12-minute interview here.

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