Medical Collections: How They Can Cost You Thousands of Dollars

Is your credit score unfairly low? Chances are, it is. That’s because our credit reporting system is flawed, and those flaws are costing hard-working Americans like you thousands of dollars unnecessarily. As a mortgage professional who has dedicated 25 years to helping people achieve the American dream of homeownership, this disturbs me greatly. I want to do something about it and you can help by signing my petition.

The Problem
Medical billing is complex and is prone to error. Millions of people are overcharged regularly, and that’s bad. What is worse is that billings are sometimes never received and when paid, are frequently recorded inaccurately. The result is that many people have a negative mark on their credit reports that shouldn’t be there, and even when resolved, continue to drive down credit scores unfairly.
These negative entries on your credit report can greatly impact your ability to receive all kinds of credit, but are especially important when obtaining a mortgage. The principal mortgage investors today are Fannie Mae and Freddie Mac, and as many realize, these government sponsored enterprises are enduring hard times at the moment. In response, they have become quite averse to risk and have increased their required credit scores for their most favorable mortgage programs.

What This Means to You
If you have a derogatory comment on your credit report, your credit score may disqualify you from the best mortgage rates, even after years of keeping your credit score high by paying your bills regularly. Think it can’t happen to you? Think again.
Recently, I was visited by a gentleman who wished to purchase a home. He was 75 years old, and he and his wife had diligently paid all of their obligations on time for 55 years. In reviewing their credit report, I found that it contained a medical collection in the amount of $180, which apparently occurred when Charles was in the hospital, and neither he nor his wife knew it existed. They were willing to pay the amount owed, but the damage had already been done. His credit score had dropped over 100 points as a result of the collection. Even after being paid, it will take up to seven years for the credit score to recover. As a result, Charles and his wife were forced to pay an additional ½ percent on their mortgage rate. Their mortgage payment is $50 a month higher than it should be. It’s a travesty that this family has to pay a penalty of $3000 over 5 years, and $18,000 over the 30 year life of the loan. Is it fair? The answer is a resounding “No!”

The Answer
I believe that we should enact a federal law mandating the complete removal of a medical collection within 30 days of it being paid or settled. All derogatory marks relating to that debt should be permanently removed from the consumer’s credit report.

This deserves national attention and ACTION today. At stake are fairness and your ability to borrow at the reasonable rates you deserve, and to not have your creditworthiness decided by mistakes from an overburdened medical billing establishment. If we can achieve our aim:

Consumers will receive better credit ratings, pay less to borrow when necessary, and keep more of their hard-earned money.
Hospitals and physicians are drowning in collection debt – this will encourage consumers to pay the debts more quickly.
The government wins as a result of hospitals and physicians having fewer bad debt write-offs, therefore generating more bottom line tax dollars for federal and state authorities.
All businesses, large and small, will realize a positive financial impact. Industries such as the automotive, banking, financial, healthcare, and housing will finally get the much needed relief that is necessary for our economic recovery.

Once again, I believe that we should enact a federal law mandating the complete removal of a medical collection within 30 days of it being paid or settled. All derogatory marks relating to that debt should be permanently removed from the consumer’s credit report.

If you agree, and would like to be part of a national movement that will change millions of lives for the better, I urge you sign my petition, tell your story, and send it to everyone you know. This affects us all, and together we can make a difference.