Origins of FICO 9
Origins of FICO 9
One Person Can Truly Make a Difference
Julia Mueller never publicly told her story, until 2012. Her story is an example that we don’t have to be politicians in order to effect change. While at the Ohio State University back in 2008. At that time Julia was part of a study that her insurance company promised to pay. The $6,200 bill fell delinquent and onto her credit report. Without her knowledge the insurance company had changed their mind last minute and denied her coverage on the study.
For the first time Julia Mueller would experience what had become a problem affecting many households across America. Later on that year she sent a letter to then-U.S. Rep. Mary Jo Kilroy asking for help. Little did she know that by 2014 almost 6 years later, things would actually change. Until then these people who had fallen victim to unforeseen medical charges would see their interest rates go up significantly. Mueller’s credit card jumped by 18 percentage points, and was left with just enough to afford to pay her used car note. [divider] Few in Congress who debated to remove negative medical debts from credit reports know the woman who inspired the original bill. Soon thereafter members of Congress began an effort to bring about new changes to the Fair Credit Reporting Act. At first they fell short and finally in 2011 the bill was introduced to committee hearings. This bill if passed would lead to the new FICO 9 changes, moving forward when paid an unsecured credit and medical debt would be erased from credit reports. Those debts would have otherwise remained on reports for up to 7 years.
In 2012 studies by government and private-sector researchers show that medical debt is impacting the financial security of many American households. Currently it is estimated that up to 40% of American consumers have a medical account in collection. Many of these accounts are as low as $20. A from 2005 to 2010 larger portion of the population ages 19-64 fell victim to this issue. The numbers would grow by more than 7 million people.
It stands to reason that any negative impact on your credit would increase your unsecured credit interest rates. Now American families would not only be faced with unexpected medical charges but even higher interest rates. For families that were once getting by somewhat comfortably they would now see their budgets pushed to the brink, living paycheck to paycheck. Thankfully with the help of people like Julia action is being taken and consumers are able to breathe a little easier.
“Drive by Doctoring”
By 2014 a practice known as drive by doctoring where assistants, consultants and other hospital employees charge additional fees was now having to come to an end. In New York a new provision in the state budget agreement was designed to protect consumers. It implied that patients would only be responsible for whatever the co-pay would be had they been in the network.
ELISABETH ROSENTHAL reported in the NY Times SEPT. 20, 2014 “After Surgery, Surprise $117,000 Medical Bill From Doctor He Didn’t Know”
“The notion is you can make end runs around price controls by increasing the number of things you do and bill for,” said Dr. Darshak Sanghavi, a health policy expert at the Brookings Institution until recently. This contributes to the nation’s $2.8 trillion in annual health costs
Insurers, saying the surprise charges have proliferated, have filed lawsuits challenging them. In recent years, unexpected out-of-network charges have become the top complaint to the New York State agency that regulates insurance companies. Multiple state health insurance commissioners have tried to limit patients’ liability, but lobbying by the health care industry sometimes stymies their efforts.
“This has gotten really bad, and it’s wrong,” said James J. Donelon, the Republican insurance commissioner of Louisiana. “But when you try to address it as a policy maker, you run into a hornet’s nest of financial interests.”
Predatory Lending Practices
The credit card companies have directly benefited from medical accounts falling into collections. The issue is medical debt directly impacting credit card interest rates. As a result we have seen the average American household unsecure credit debt increase to over $15,000. When the medical industry drops the ball in failing to provide insured and uninsured consumers with a full disclosure of all applicable costs, why does this then raise our interest rates for existing revolving credit accounts?
Moving forward once your collections accounts have been paid they will no longer linger on your credit report adversely impacting your credit score for up to 7 years. Whether it is by paying it back in full or settling the account in collections the record will have no bearing on your future credit score. Always stay involved and be aware of what is happening with your unsecured medical and credit accounts.“One person can make a difference, and everyone should try.”- John F. Kennedy