• Skip to main content
  • Skip to primary sidebar

Nexa Collections

  • Home
  • Serving
    • Medical
    • Dental
    • Small Business
    • Large Business
    • Commercial Collections
    • Government
    • Utilities
    • Fitness Clubs
    • Schools
    • Senior Care Facility
  • Contact Us
    • About us
    • Cost

Disadvantages of Removing Medical Debts from Credit Reports

medical bill credit report

Several federal and state initiatives have been introduced to completely remove healthcare debt from patients’ credit histories. However, little attention is being given to the potential downsides of such a change.
A medical debt is still a debt, and hiding it does not eliminate the obligation. Omitting such information can lead to unintended consequences for both lenders and borrowers.

If medical debts are removed from credit reports, there could be several issues:

  1. Incomplete Credit History: Credit reports would no longer reflect all of a person’s financial obligations. This means lenders might not have a full picture of someone’s ability to manage and repay debts.
  2. Risk Assessment Challenges: Lenders use credit reports to assess the risk of lending money. Without information on medical debts, they might find it harder to accurately gauge this risk, potentially leading to more cautious lending practices.
  3. Higher Interest Rates: To compensate for the lack of information, lenders might increase interest rates for everyone. This could make loans and credit more expensive, even for those with good credit histories.
  4. Reduced Incentive to Pay: If unpaid medical debts don’t affect credit scores, some people might be less motivated to pay them. This could lead to higher default rates on medical bills.
  5. Impact on Healthcare Providers: Hospitals and medical professionals might struggle to collect unpaid bills. This could affect their financial stability and possibly lead to increased healthcare costs to offset the losses.
  6. Fairness Issues: People who have worked hard to pay off their medical debts might feel it’s unfair that others who haven’t paid face no credit consequences.
  7. Alternative Data Sources: Lenders might start using other, less regulated sources of information to assess creditworthiness. This could raise privacy concerns and potentially include inaccurate data.
  8. Strain on the Credit System: The overall reliability of the credit reporting system could decrease if significant types of debt are excluded, affecting its effectiveness in the financial industry.

 

Background:

Small Debt Exclusion: Starting in 2023, medical collection debts under $500 are excluded from credit reports.

Extended Reporting Time: The time before unpaid medical collection debt appears on a credit report increased from 6 months to 1 year.

The Consumer Financial Protection Bureau (CFPB) has proposed a rule ( supported by Biden administration and Kamala Harris) that would eliminate the special medical debt exception, which currently allows lenders to obtain and use information about medical debt in making credit eligibility determinations.

While this ( if it becomes a reality) change would undoubtedly provide much-needed relief to patients struggling with medical expenses, it’s important to recognize that the government’s current approach to implementing this policy may not effectively address the root causes of medical debt and could introduce new challenges for the financial system.

Fact: America’s medical system is broken !

By considering these factors, it’s clear that removing medical debts from credit reports could have unintended negative effects on both individuals and the broader financial system.

Filed Under: Medical

Primary Sidebar


accounts receivable

Need a Collection Agency?
Kindly fill this form.
We’ll get in touch with you

    Please prove you are human by selecting the star.

    Recent Posts

    • Why Cybersecurity Matters for Collection Agencies
    • 11 Ways Dental Practices Can Recover Unpaid Bills (Without the Headache)
    • Credit Bureau Reporting Forbidden on Several Types of Debts
    • Effective Tactics for Regaining Company Assets from Departed Staff
    • Low-Cost, Patient-Friendly Billing for Small Dental Practices
    • Changing Medical Credit Reporting Laws: Urgently Hire a Collection Agency!
    • Disadvantages of Removing Medical Debts from Credit Reports
    • Collection Agency Closure Checklist: Legal, Financial, & Operational Steps

    Featured Posts

    • Risks and Benefits of AI on Accounting Jobs
    • 5 Key Benefits of Using Technology to Engage with Patients
    • Urgent Care Clinics Billing Issues
    Directory of collection agencies

    Note: Nexa is an information portal that helps businesses and medical practices to find a good collection agency at no cost to them. We are not a collection agency. We do not perform any collection activity, nor take payments, nor do any credit reporting. Leads shared with shortlisted agencies with Low Contingency Fee and High Recovery rates.

    Featured Agencies

    • Collection Agencies in Sheridan, WY
    • Collection Agencies in Norcross, GA
    • Collection Agencies in Salisbury, MD

    Copyright © 2025 NEXACOLLECT.COM | All information on this website is for general information only and is not an experts advice. We do not own any responsibility for correctness or authenticity of the information, or any loss or injury resulting from it. Nexa is not a collection agency. Relevant inquiries are contacted by our shortlisted collection agency partner(s)

    X
    Need a Collection Agency?
    Contact Us