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Biden administration moves to ban medical debt from credit reports
(www.nbcnews.com)
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this post was submitted on 11 Jun 2024
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This is simply huge. I don't know if the average person knows how much this is going to affect Americans. It will have a massive positive benefit. I mean so much of my life was a struggle because of medical debt on my credit report, that should never have been there in the first place by the way. I'm thrilled by this this is a great change.
Could you expand on why this makes such a big difference? I'm not very knowledgeable in this area. Is medical debt treated differently than other debts by lenders?
My first thought was that medical debt, like any other debt, has financial obligations that lenders would have to know about to determine the amount of credit a person is eligible for. Wouldn't medical debt payments impact the amount of additional debt you can afford?
The significant difference is that medical debt in the US is not usually elective. I can choose to sign up for a credit card, or I can choose to apply for a house/car loan, or I can choose to go to college, or I can choose to start a business. Are you gonna choose to ignore going to the ER when you break your arm, or are having chest pains, or are airlifted after a drunk driver T-bones your car? Are you gonna refuse your child's chemotherapy or dialysis treatments?
The US medical system is fucked up from top to bottom.
(Also note I'm not commenting on whether elective debt in the US is fair, only highlighting the difference between medical debt and other debts.)
It ends up on your credit report while you're trying work it out between the hospital and the insurance company. Phone calls to one, phone calls to the other, and then, if you get it worked out, you have to file a claim with each credit reporting agency to get it removed. It's like a full time job. And, once you get it cleared up with the hospital, you have to do the same with every medical person involved.
Ah, that makes a lot of sense. Thanks for explaining. I've been fortunate enough to avoid major medical expenses or debt, so I hadn't thought of the situation you've described.
Someone correct me if I'm wrong, but similar to how you don't need to disclose alimony when applying for a mortgage, it's more on the type of debt. Yes it's still debt at the end of the day and certainly impacts your ability to pay a loan, but most reasonable people and proponents of universal healthcare push for it to not be considered a factor when assessing one's credit worthiness because of how destructive it is. Healthcare is something that cannot be avoided, unlike non-essential credit card debt from shopping for example.
I'm kinda rambling as I can't really say exactly what I want to say, but hopefully someone who can explain it better can chime in.