Medical Debt Is Disappearing From Americans’ Credit Reports, Lifting Scores

Noam Levey

KFF Health News

Originally published 2 Nove 23

The share of American consumers with medical debt on their credit reports has declined dramatically over the past year as major credit rating agencies removed small unpaid bills and debts that were less than a year old, according to a new analysis from the nonprofit Urban Institute.

At the same time, millions of Americans have seen their credit scores improve, making it easier for many to get a job, rent an apartment, or get a car.

“This is a very significant change,” said Breno Braga, an economist at the Urban Institute and a co-author of the study. “It affects a lot of people.”

For years, medical debt has depressed credit scores, undermining the financial security of tens of millions of patients and their families.

Under mounting pressure from patient advocates and government regulators, the three major credit agencies over the last two years have taken a series of steps to remove some medical debts from credit reports, including unpaid medical bills under $500.

The changes appear to be having an impact. As of August, just 5% of adults with a credit report had a medical debt on their report, down from almost 14% two years earlier.

Urban Institute researchers also found that Americans with a medical debt on their credit report in August 2022 saw their VantageScore credit score improve over the next year from an average of 585 to an average of 615.

The info is here.

Here is my summary:

The article discusses a study conducted by the Urban Institute, focusing on the impact of removing medical debt from credit reports. The study reveals that eliminating medical debt from credit reports can significantly improve individuals' credit scores and financial well-being. The research found that once medical debts were removed, more than two-thirds of affected individuals experienced an increase in their credit scores, with an average rise of 16 points. This is particularly crucial as medical debt is often incurred unexpectedly, and its presence on credit reports can lead to long-lasting financial consequences for individuals, affecting their ability to secure loans or access favorable interest rates.

Furthermore, the study suggests that removing medical debt from credit reports can contribute to reducing racial and ethnic disparities in credit scores. It highlights that individuals from communities of color are disproportionately affected by medical debt and its consequences on creditworthiness. By addressing this issue, there is an opportunity to promote greater financial equity and inclusivity. The findings underscore the potential benefits of policy interventions or industry practices aimed at mitigating the adverse impact of medical debt on individuals' credit histories, thereby fostering a more equitable financial landscape.

Late Payments, Credit Scores May Predict Dementia

Judy George

MedPage Today

Originally posted 30 Nov 20

Problems paying bills and managing personal finances were evident years before a dementia diagnosis, retrospective data showed.

As early as 6 years before they were diagnosed with dementia, people with Alzheimer's disease and related dementias were more likely to miss credit account payments than their peers without dementia (7.7% vs 7.3%; absolute difference 0.4 percentage points, 95% CI 0.07-0.70), reported Lauren Hersch Nicholas, PhD, MPP, of Johns Hopkins University in Baltimore, and co-authors.

They also were more likely to develop subprime credit scores 2.5 years before their dementia diagnosis (8.5% vs 8.1%; absolute difference 0.38 percentage points, 95% CI 0.04-0.72), the researchers wrote in JAMA Internal Medicine.

Higher payment delinquency and subprime credit rates persisted for at least 3.5 years after a dementia diagnosis.

"Our study provides the first large-scale evidence of the financial symptoms of Alzheimer's disease and related dementias using administrative financial records," Nicholas said.

"These results are important because they highlight a new source of data -- consumer credit reports -- that can help detect early signs of Alzheimer's disease," she told MedPage Today. "While doctors have long believed that dementia presents in the checkbook, our study helps show that these financial symptoms are common and span years before and after diagnosis, suggesting unmet need for assistance managing money."

The info is here.