Medical Debts Can Hinder Your Refinancing
Posted on January 10th, 2011
The Wall Street Journal has posted an article that discusses how even a small medical bill can lower your credit score and can even keep you from refinancing your home.
Cristina Lourosa-Ricardo, writer of the article, uses the example of Jeanne White. Ms. White found out in October that she had two doctor bills for $11 each that had caused her credit score to fall from 757 to 680. The bills had been turned over to a debt collection agency and made refinancing much more expensive than she had originally planned for. Worse still, the bills were issued in error.
“I was told I’d have to pay $14,000 in closing costs to get a 5.5% interest rate,” Ms. White says, substantially more than she would have paid with a higher credit score.
Ms. White isn’t the only example of this. Many consumers with steady jobs and good loan-to-value ratios have found it difficult to refinance due to medical billing errors knocking their credit scores down. 14 million Americans have errors on their credit reports from medical billing errors. The billing errors can go unnoticed for many years and can cause refinancing closing costs to be impossibly expensive or cause the borrower not to be approved for refinancing at all.
The Medical Debt Relief Act was passed by the House and is currently in the Senate and will give to help homeowners with medical debt problems by removing “settled medical debt from credit reports after 45 days, instead of the customary seven years.”
Consumers can protect themselves by routinely checking their credit score and keeping an eye out for medical bills that are issued in error.
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Tags: Medical, Medical Debts
Filed under Financial Tips |