New rules can raise your credit score
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Earlier this month, the three major credit bureaus – Experian, Equifax and TransUnion – announced a change to their credit scoring methodologies that will benefit a great many consumers. The agreement also promises to make credit file errors easier to fix. These are some of the biggest changes that have hit the credit report world in a long, long time. Today we'll take a look at how these changes could impact you and how to take advantage of them to improve your credit score.
Medical bill changes
Medical bills are a huge challenge for far too many Americans. Even for those that have insurance that will cover the costs, it can take many weeks and even long months of arguing with your insurance company to get some expenses covered. You don't want to pay a cost that insurance will cover. That's an expensive habit, and then you have to deal with getting a refund from the medical provider and make sure they return the cash to you and not your insurer.
Under the new changes, medical bills will no longer be reported by the credit bureaus for six months after they're reported delinquent. That gives you close to a year (give or take) to take on your insurance company and make them pay up. For those amounts that aren't covered, it should give you around 12 months or so to make payment arrangements or take care of a bill to keep the debt from lowering your credit score.
According to the Consumer Financial Protection Bureau, 52% of the debt on credit reports is due to unpaid medical expenses, so this is a huge problem for many consumers. The credit bureaus also announced they will remove medical debts that were paid by insurance from credit reports. The company that created the FICO score, Fair Isaac Co, announced last year that they would not calculate medical debt as heavily in future score calculations. This only matters though if the creditor uses the latest version of the score calculation (credit issuers can pick and choose which version they use).
Credit report error correction
The other new change is that the agencies will no longer automatically side with creditors when it comes to errors. For instance, if you notice that a credit card issuer reported a late payment but you know you paid on time, you would send in proof to try and get it corrected. Before, if the credit card company held firm and said it was late, the credit agency would drop the matter. But now, credit bureaus will have people review what was largely an automated process to investigate consumer claims and to come down on their side when the creditor is clearly in the wrong.
As part of the announcement by the bureaus, Attorney General Schneiderman said, “This agreement will reform the entire industry and provide vital protections for millions of consumers across the country. I thank the three agencies for working with us to help consumers.” If you have medical bill issues, bear in mind that you now have an expanded window of time to get your insurance provider to pay up before it impacts your credit score. And if you've filed error correction requests in the past that were rejected, now is the time to try again. These changes will begin to take place over the next few months and will take a couple of years to integrate fully.
If you're dealing with a mountain of unpaid medical bills that insurance won't cover, maxed out credit cards and are living paycheck to paycheck, you need help. Contact the law offices of John T Orcutt for a free consultation at one of our North Carolina bankruptcy offices in Raleigh, Garner, Greensboro, Wilson, Fayetteville or Durham. Call 1-888-234-4181 and ask about zero down bankruptcy.