Medical debt is ruining the credit scores of millions of Americans - The Washington Post

If you have a bill in collections that is dragging down your credit score, chances are high that it’s medical.


Some 43 million Americans have delinquent medical debt on their credit reports, amounting to about one in five credit reports, according to a report released Thursday by the Consumer Financial Protection Bureau. The bureau is calling attention to the burden that medical debt can create for consumers and the negative effect that it can have on their credit reports. The CFPB also created new reporting rules that could make it easier to spot errors.


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The CFPB also announced that major credit reporting agencies — including Experian, Equifax and TransUnion — will be required to report any complaints they receive about the accuracy of consumers’ credit reports. Such information should help the bureau to identify the types of debts that are more likely to be reported erroneously.


The report comes at a time when consumer advocates and credit reporting bureaus are trying to revamp the way credit worthiness is measured. In the fall, the Fair Isaac Corporation (FICO) started using a new scoring model that changes the way medical debt is weighted and no longer factors in overdue payments that have since been made. The CFPB expects to propose new rules for debt collection agencies next year, focusing on accuracy and how consumers are treated.

Medical debt is ruining the credit scores of millions of Americans - The Washington Post


See also:

• AnnualCreditReport.com is organized by the three large credit bureaus to provide you with your three detailed reports no credit score, just the reports).
• CreditKarma.com the score does not sync up perfectly to the three credit
  bureaus, but it gives you a general idea of how your score compares to
  national averages.
• Qizzle.com is similar to CreditKarma, offers a free VantageScore 3.0 credit score and a free Equifax credit report every six months. Many tools to help gain a complete understanding of credit and provides tools to help users repair their credit and report
  problems.

For-Profit College Accused Of Luring Students Into Predatory Loans

For-profit schools such as ITT, DeVry, and Phoenix are just short of being scams. If you are planning on transferring to a 4-year school most if not all of your credits will not transfer (the best you can hope for is testing out). If you think you may want to go on for a Masters, good luck.

If your local juco cost $15,000, plan on spending $30 grand at a for-profit. It is how they generate the gap needed to justify these predatory loans. They do not allow for part-time enrollment (under 12 credit hours), so taking 1-2 classes is not an option. Most loans (that I am aware of) will not finance part-time schooling so, no money to be made by the schools. Rules may be different for jucos or standard 4 year colleges.

If you send for information via a contact form on the web, be prepared for at least 3 phone calls a day, everyday for weeks; starting within hours of hitting the send button. Even after you tell them you are not interested they will use high pressure tactics to try and get you to visit the school. In one case, the school I looked at wouldn't even send me information until after I spoke with a financial rep in person.


If you're seriously considering returning or finishing your schooling start with a juco. Get your basic general ed requirements out of the way (or try testing out, though that does cost money). If after that you want to continue on to a BA/BS degree, the transition and transferring of credit will be much smoother. (If you know that is what you want to do, and what 4 year school you will attend, you can check before hand about their credit transfer policy. Most "state" run jucos and 4 years have a mutual transfer policy.)

Don't get burned people.

The federal consumer protection agency filed suit on Wednesday against ITT Educational Services, accusing the major for-profit college corporation of forcing students into high-interest, private loans expected to leave a majority of borrowers in default.

The case marks the first time the Consumer Financial Protection Bureau has taken action against the for-profit college industry, which is facing heightened scrutiny for its marketing practices and student debt burdens from more than a dozen attorneys general and the U.S. Department of Education.

The suit from the federal consumer protection agency alleges that ITT, which operates more than 150 institutions across nearly 40 states, systematically deceived thousands of mostly low-income students by rushing them through the financial aid process and enrolling them in high-cost loans with interest rates of more than 16 percent. Some financial aid counselors threatened to expel students if they didn't sign up for the private loans.

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Because the tuition at ITT's schools is more than the maximum federal student aid limit, students have to fill in the gap with cash or outside financing.


To encourage prospective students to enroll, ITT lured them with a zero-interest "temporary credit" loan to pay for the first year of school, according to the suit. Most students could not pay off the temporary loan within nine months, as required, so financial aid officers then pressured them into "repackaging" the debt into a private loan with much higher interest rates.

For-Profit College Accused Of Luring Students Into Predatory Loans