A new bill introduced on Capitol Hill seeks to change how medical debt is reflected on credit reports, offering consumers the opportunity to improve their credit scores by including positive medical debt payments.
Currently, medical debt can negatively impact credit scores, but paying off this debt doesn’t contribute to improving them. In response, U.S. Representatives Don Bacon and Marie Gluesenkamp Perez have introduced the bipartisan Reporting Medical Debt Payments as Positive Consumer Credit Information Act of 2024. This legislation aims to allow medical payments, once settled or paid, to be reported to credit reporting agencies (CRAs) in a way that can help boost an individual’s credit score.
Bacon’s office emphasized the importance of this change: “Medical debt currently drags down credit scores, but making payments on this debt doesn’t improve them. This bill will correct that by recognizing medical payments as a positive factor for building credit.”
Rep. Gluesenkamp Perez echoed these sentiments, noting that families working to pay off unexpected medical bills should see their efforts reflected in their credit scores. “Reporting positive progress on medical debt will help working families build credit for the future, even in the face of financial strain due to unforeseen medical expenses,” she stated.
Capio Partners, a company specializing in medical debt management, also voiced its support for the legislation. The company’s CEO, Mark Detrick, highlighted the potential benefits of positive credit reporting for patients, particularly those working to pay off their medical debt. “This approach rewards responsible actions like making timely payments,” Detrick explained. “Just as paying rent or car loans builds credit, so should paying off medical debt. It’s a simple but impactful change for consumers aiming to improve their financial standing.”
Key Changes Proposed by the Bill:
- Positive Reporting of Paid Medical Debt: Credit reporting agencies (CRAs) will be allowed to include information about medical debts that have been paid or settled within the past year on consumer credit reports, helping improve credit scores.
- Reporting of Payment Plans: If a consumer is enrolled in a payment plan with a creditor for their medical debt and consistently meets the plan’s obligations, this positive performance will be reported to CRAs, allowing consumers to build credit while managing their debt.
- Recognizing On-Time Medical Payments: On-time payments toward medical debt will contribute positively to credit evaluations, just as rental or car loan payments do, offering consumers a fairer way to improve their credit standing.
- Fairer Access to Financial Services: By including medical debt payments in credit evaluations, this amendment gives patients an opportunity to rebuild credit and access better financial services, rather than being solely penalized for unpaid medical debt.
The bill proposes amendments to the Fair Credit Reporting Act, allowing medical debt payments or settlements to be reported positively if they are completed within a year prior to the credit report date. It also allows for reporting on medical debt payment plans that are being met by the consumer, offering an opportunity for individuals to build their credit score while responsibly managing their debt.
For many consumers, this legislation could provide a much-needed boost to their credit scores, recognizing the effort they put into paying off medical debt. By ensuring that on-time medical payments are included in credit evaluations, this bill could give patients a fairer chance to access financial services and rebuild their credit.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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