Consumer Credit and the Removal of Medical Collections from Credit Reports
consumerfinance.gov
consumerfinance.gov
This stuff with medical organizations should be criminal, but for whatever reason, they get a pass harassing citizens. Put a bill to this absolute nonsense, and I'll immediately vote to punitive damages for these corporations taking advantage of people.
The bigger problem is that this is a cure for a symptom of a dysfunctional medical billing lifecycle that in its current incarnation should be outlawed.
All of this is defamation, and is a tort. There's nothing you can do except waste ridiculous amounts of time playing the never-ending cleanup wars, or have your expensive attorney do that for you. The problem is how easy it is to get fake data into a report on You, that a company sells. They have zero interest in it being accurate, as the worst that happens to them, is they remove the fake data after spending about 5 minutes on it. After you spend either hours/days or thousands of dollars.
I lived in a high-rise that gave free directTV. Never used it. Moved out. A bill for almost a year of some football package showed up on my credit report. Apparently they sent an opt-out letter for this expensive addon to their free service, and billed anyone who didn't reply. When I showed directTV that the billing period was for two months after I'd moved out, they did zero. I asked for verification of debt - the standard "reddit knowitall teen" suggestion. Absolutely nothing happened. I filed an FTC complaint - Nothing.
For some reason, when I opened a case with the original yelp-type scammers, the BBB, I got a call from a manager and the debt was finally removed.
What needs to happen is a barrier to getting negative data into a report someone provides on you. If that report contains defamation, and if you prove it to a non-currently-existent agency that oversees the credit bureaus, they have to pay you for defamation, w/o you suing them. Tens of thousands per false record, per person.
The reason this happens is not medical organizations. There are always bad actors, and always will be. No one trusts the bad actors - they trust the TransUnion (they/them) report. TransUnion is in the business of taking garbage, and putting a trust stamp on it. Similar to what lead to the securities market getting railed.
I can understand the need for a registry of people who cheat or simply don’t pay back, but even that is sort of an “evil” area to me since it can trap people. But an actual credit score? That seems very dystopian.
And how do you score it? I’m a poor bank customer, I’ve almost never taken any loans, and when I did I either paid them back more quickly than the bank would’ve liked, or it was for tax benefits like with my 60% mortgage. I have savings and investments, but I manage them myself meaning that I generate no real fees of note for the institutions that house them. So technically I’m sort of a terrible customer for a bank, but I imagine my credit score would be quite high?
/Edit
Thanks for the responses. I'd like to point out that we do get scored in Denmark where I live, but it's happening when you apply for things.
When my wife and I bought our house, we submitted a range of financial records, and we also granted the bank temporary access to obtain financial information about us from places like the national tax agency and the registry of "poor lenders". Which is I guess is similar to a "credit score", but to me it's different because it is generated and accessed at a specific time, and then gone.
Maybe that's actually how the credit score works, but seeing those apps where you can see your "number" felt dystopian to me.
All that being said, I do appreciate that centralized scoring can go too far. And I don’t have the answer for where a line should be drawn. Or how far back in time the scoring should assess. (BTW, it’s generally 7-10 years I believe, which is pretty short)
How is auto insurance handled where you are? How would you feel about no-fault insurance rates where every driver pays the same amount regardless of risk?
If you don't pay, debt goes to a specific government ministry that picks you clean (property, assets, accounts) until debt is paid off, leaving you with nothing more than enough to eat and pay rent every month (for a tiny apt).
Every time you try to take a loan or buy something on a payment plan, the seller will check with the ministry if you are registered there. You can't get anything unless paid upfront in full, no cellphone subscription, no credit cards.
Once debts are paid off, you are still in the registry for 3 years (unless you rack up more debts).
As in, if I never take a credit and save all my money, I don't have a good credit score, but if I spend 95% of my net income on weird stuff, but do pay my credit card bills on time I suddenly have a good credit score? As exemplified by advice I often read to route as many recurring payments as possible (including rent) through a credit card (and paying on time, ofc).
I mean, that's how it was explained to me, but happy to be proven wrong.
Are you sincerely confused that building a credit score requires you to actually use credit?
I suspect most of the building credit Behavior comes into play when you are trying to dilute derogatory marks on your credit reputation. If you missed a $50 bill, it is better if it is one of hundreds of transactions then one of 10.
With that said, I can see the value of showing some experience of servicing debt. Imagine being a banker talking to someone asking for a large loan. Someone with a documented history of paying on time is naturally lower risk then someone with no history
They generate profits by loaning those out and not giving you the interest.
To answer your other question about how it's determined, it does not measure how much banks make off you. It measures how well you pay off debts. So taking out debts (or using a lien of credit) and paying it back shows that. As does making regular mortgage payments. You can have good credit in the US while paying no extra money to any banks, with interest free car financing and no-fee credit cards you can pay off in full.
Not this way, or not at all for all anyone else should care. Banks are paid interest for taking a risk, so let them take the risk. No other country on Earth has credit scores like the US, and they don't want them because credit scores are disgusting, inhumane.
Sorry, what you said is false and easy to verify.
There are plenty of creditors today who have no or poor credit, and they can still get loans (especially for cars) it’s just at absurd interest rates. Eliminating credit scores will just put everyone in the same (very high) bracket.
If you want to actually fix the system, substantially raise the barrier to non-revolving accounts reporting debts and make a reasonable process to dispute that debt.
Credit agencies should be more mediators than data-sellers.
Well, clearly they have to have some way to tell. Or would I be able to borrow hundreds of billions to buy TSLA because I think it's undervalued in your example.
Clearly, banks assess how much to loan at what interest rate, and those numbers are different for different people. How else do you think they should make their decisions?
It’s the least painful way of enforcing some personal responsibility for debts taken for personal benefit, and because medical treatment is socialized and the government looks after the poor, nobody should ever be faced with the need to borrow to continue living.
Credit scores in the US are much more sinister, in that respect, representing a measure of not only fastidiousness but also desperation.
Correct. It's not a profitability score, it's a risk score. The only thing it tracks is how likely they think you are to pay back the loan.
They like to see activity though, they want to see you borrow money and pay it back. If you never borrow money your score can be lower since they don't have data on it.
> But an actual credit score? That seems very dystopian.
At the end of the day your lender is going to evaluate you. In the US they standardized it instead of letting it be subjective. Does that really seem dystopian?
1. Socialize the risk by charging much higher interest rates.
2. Use an informal "shadow credit score" that is based on things like physical appearance, personal connections, and illegal blacklists.
3. Stop lending to private individuals without a security covering essentially the full loan amount.
All of these seem much worse than the existing credit scoring systems.
Why? The govt is not scoring you. It is done by companies.
In regards to scoring, its complex, but generally: pay your debts on time and on schedule. Importantly, do not pay off loans early. You'll get positive points for eliminating debt, even early, but more positive points for paying the maximum interest the bank would like to earn from the money they loan you.
0. https://www.nclc.org/images/pdf/credit_discrimination/Past_I...
No, why? How else do you ascertain risk?
A democracy =/= banking and financial products. Sure there is a central bank, but that is not related to this conversation. The credit agencies are not government facilities. Credit agencies are regulated by the government.
At its core, credit reporting agencies are collecting a registry of information about your credit accounts. How long have they been open, what's the total amount of credit available and the current balance. This is then used to determine if a lender wishes to offer you more credit, and if so, at what rates. A credit score is an algorithm to generate a numeric value from all those records (or the result of such algorithm). It's a labor saving step that also allow a lender to be more consistent in underwriting decisions. Typically, a credit card will check credit scores and ask about income, and similar for a car loan; a mortgage will be more likely to read the whole report and ask for paystubs to validate income, as well as require a release for tax records (but usually not actually request them). Without credit reporting, you would probably need to get letters from previous lenders attesting to your timely payments, etc; but it would be easy to leave out the lenders you didn't pay. Credit reporting gives lenders who don't get paid a stick to influence their borrowers that's easier to administer than taking them to court (which would generate court records, which are generally public in democracies).
Generally to score well, you want to have several active credit accounts in good standing (no reported late or missed payments), utilization on revolving accounts (credit cards) at 30% or less in aggregate, and probably 85% on individual cards, but not having significant balances at more than two or three cards, at least one account having been open for many years, not any or at least not many accounts opened in the last year, and it's helpful to have a current or recent installment loan (like a car loan or mortgage). Hard to say where you would fit on the scoring, depends on if your mortgage is still current, and what you do with credit cards.
That's not how it works. You should have disputed the debt. If it was a billing mistake then you technically don't owe the money, and the charge should have been disputed. Get yourself an attorney, their fee to make the negative reports go away could be less than the bill.
That is to say, somebody else screwed up and now you have to pay money no matter what.
Sometimes the debt moves across so many middlemen that the holder never even receives the request and the debt gets erased.
Threaten to report them to your state if they don't cancel the bill.
Next get your credit report and file a dispute that that part of it is inaccurate. The vast majority of the time it just gets removed because the biller can not be bothered to submit the needed documentation.
If they sent it to collections that's even better - just call the collection company and tell them it's wrong, and give them a long complex full explanation of why. They will drop the bill immediately - it's not worth their time to fight you.
When I complain they offer me a "courtesy credit". Or I don't complain and just don't pay since if they can't be bothered to bill me correctly, I can't be bothered to pay.
So yah, admin mistakes. Deliberate ones.
Insurance just pays, they don't check the coding as carefully (how could they, they were not at the appointment).
An extremely common "mistake" (up-coding) is increasing the length of the Dr. visit up a level or two. Take a watch with you, and check how long the Dr. was actually present with you, then check the coding. (And paperwork and nurse time is built in, so it's not necessary to account for that when checking.)
They'll also bill for services they talked about, but didn't actually do.
And they'll code separately for a service that's supposed to be bundled with another code.
I've seen every one of these.
The US health care system is crazy in many ways, but hospital/doctor office billing and admin is one of the more egregious. I firmly believe they make money by people simply paying every statement they get, some of which the insurance company will later take care of anyway, just out of fear of these "collections"
Except my insurance paid and said I owe nothing. Then I received a bill a year after the fact, and I contacted mY insurance who again said I owed nothing, said they talked to the company and the company said they would correct the mistake. Then a week later the bill came again, and I repeated this again.
I’ve now done this weekly for the last two months waiting for them to try to harm my credit rating.
This is pretty interesting. I wonder what other types of collections are 'forgotten' well before their allowed reporting limit?
“A new federal housing rule will make reliable borrowers subsidize risky loans“
I'm going to go out on a limb and suggest the downside is trivially avoidable by either side and the upsides could be substantial for many folks.