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Medical Debt Impacting Credit

Does Medical Debt Impact Your Credit Score?

By | Debt

Medical debt is no longer displayed on your credit report the same way it used to be, but it can still impact your credit if it goes unpaid for too long. With recent changes in reporting requirements, there are new rules surrounding how long you have to pay off your medical debt before it gets reported and starts impacting your credit.

Here’s what you can expect to happen to your credit once you start to accumulate any kind of medical debt.

When Medical Collections Show Up on Your Credit Report

Medical debt doesn’t show up on your credit card until it’s left unpaid and goes to collections. Early on, it’s treated like any other bill in that it’s not listed on your credit report. If it’s a large amount that you can’t pay off in a lump sum, it’s best to try and sign up for a manageable payment plan with your medical provider. However, if you don’t pay on the balance for whatever reason, your account could end up being sold to a debt collection agency.

At that point, the collection agency is likely to report your medical debt to the credit bureaus. Like many other types of negative entries, medical debt is listed on your report for seven years, unless removed by initiating a credit dispute. The seven-year period starts from the first delinquency date associated with your medical debt.

What Happens to Unpaid Medical Debt

On the plus side for consumers, there are some extra restrictions that the credit bureaus must abide by when listing medical debt. Even if the collection agency reports the debt to Experian, Equifax, or TransUnion, the credit bureau must give you a 180-day grace period to pay off your balance. That period starts from the original due date, giving you a full six months to make arrangements to pay the bills.

So even if your health care provider sold the debt three months after your due date, you still have another three months to catch up. This also gives you time to potentially ask your insurance company to help you negotiate. The claims process can be a slow and tedious one, so this extended grace period is meant to make sure your credit doesn’t tank just because your insurance company took too long to pay all or part of the balance. Once the debt makes it onto your credit report, it’s listed as an unpaid collection.

How Credit Scoring Models Weigh Your Medical Debt

If you don’t manage to pay off your medical collections debt within the grace period, it will then likely be listed on your credit report. However, your score won’t suffer as much compared to other types of debt. That’s because the latest scoring models from both FICO and VantageScore don’t weigh medical debt as much as other types of debt, particularly credit card balance. It makes sense why — medical bills don’t generally indicate a pattern of poor financial decisions.

On the downside, not all lenders and financial institutions use the most current scoring models from FICO or VantageScore. Older versions may weigh medical debt equally with other kinds. Still, as companies continue to move forward and upgrade their lending platforms, it’ll be much easier to improve credit related to medical debt.

How Credit Disputes Work for Medical Debt

It is possible to get unpaid medical debt removed from your report so that you can fix your credit score before you reach the seven-year delinquency mark. Check your records for any credit errors. If you find any discrepancies in the debt amount, payment debts, or any other information, you may be able to start a credit dispute and have the entry negated. This entails sending a letter to the credit bureau. Regardless of their findings, the investigation should be completed within 30 days. Be sure to keep copies of all your communications related to your medical debt, both with the collection agency and the credit bureaus.

If you’re trying to fix your credit related to medical debt or any other negative items on your report, it can be helpful to get professional help. You certainly can execute the dispute process on your own, but it can be an extremely time-intensive process. And if you don’t research your rights adequately, you may end up doing more damage to your credit score.

Luckily, a professional firm like Ovation Credit can help. Our team of lawyers has years of experience in the field, plus knowledge of the intricacies of credit and debt law.

Get started with a free consultation today to start the credit repair process.


7 Smart Ways to Use Your Tax Refund This Year

By | Personal Finance

If you’re one of the millions of Americans receiving a tax refund this year, you might be tempted to take a vacation or go on a shopping spree. But before you do any of these things, consider thinking a bit more strategically. Here are seven ways to spend your tax refund that could set you up for a more financially secure future.

1. Pay Down High-Interest Debt

Owing a lot of debt can be costly, not to mention a major strain in keeping up with your payments each month. Do yourself a favor and use your tax refund to make a large payment on your existing debt. It can help reduce your monthly bills, plus save yourself a substantial amount of money in interest over time.

2. Boost Your Emergency Savings

Another smart refund strategy is to create an emergency savings fund or add to it if you already have one. This can help prevent you from accumulating new debt because you have a built-in buffer for unexpected financial emergencies. The next time your car breaks down or you have a medical issue, you won’t have to charge or borrow money to take care of it. Using your tax refund for your emergency fund can take a lot of stress out of your life.

3. Contribute to Your Retirement Savings

Most Americans are dangerously underprepared for retirement. Even if you already contribute to a retirement fund, it’s good to regularly reassess how your progress is coming along. You can use your tax refund to contribute to an employer fund if you don’t already max out your annual contributions. You may also qualify for opening up either a traditional or Roth IRA. Each type is taxed at a different time, so do some research to determine which one is the best option for your current situation.

4. Make a Tax-Deductible Donation

Donating to a non-profit organization with your refund could help you prepare for next year’s tax season. In most cases, this type of donation is tax deductible. If you want to decrease your tax burden even further, especially if you’re riding the line between two different tax brackets, a donation could help you while also making a difference to your chosen charity. Consider chatting with a tax advisor if you think this tactic could help you next year.

5. Tune Up Your Major Investments

While a tax refund could easily be used for a major purchase or upgrade, don’t forget about regular maintenance of your existing property. Maybe your home’s HVAC needs some maintenance. Or perhaps your car could use a tune-up or some new tires. Oftentimes, a bit of prevention early on can be much less expensive than addressing a larger issue later on. If you don’t include these things in your regular budget, think about using your tax refund for your usual deferred maintenance.

6. Make an Extra House Payment

Using your tax refund to make an extra house payment each year can put a huge dent in your mortgage over the years. Depending on your principal and interest, you could easily save tens of thousands of dollars in interest over the life of your loan. Not only that, you could shave off a few years from your mortgage if you start making extra payments early enough.

7. Invest in Professional Credit Repair

If you have less than perfect credit, you’re automatically setting yourself up for more limited access to credit, plus more expensive credit even if you do get approved. There are certainly ways you can fix or improve your credit on your own, but there are several benefits to investing in a professional credit repair service. First, a reputable company, like Ovation Credit, has an expert staff to create the most effective credit disputes. On top of that, you can save yourself countless hours over the course of several months spent on fixing your credit errors. To make sure you get your credit repaired in an efficient and effective manner, it may be worth spending some of that tax refund on a better credit score.

Getting a tax refund is an exciting time, especially if you weren’t expecting such a large lump sum payment. Don’t rush yourself into making any spending decisions until you’ve fully thought out your short- and long-term financial goals. Think about what you need to do to help you achieve those dreams. Then think about using some of these strategies to help you get there.


Women Curb Spending Habits

3 Easy Ways to Curb Your Spending Habits

By | Credit Cards

Spending less on your day-to-day life can help you put extra savings away, whether for an emergency account, a retirement fund, or even a vacation. But when it comes to actually saying no to swiping your card or hitting a purchase button online, you may have a harder time sticking to your savings goal.

Before you give up, try out these three easy ways to curb your spending habits. They’re not difficult to implement and you’ll notice a major difference in your bank account when you keep up with them each week and month.

1. Purge What You Already Have

It may seem counter-intuitive, but having a ton of stuff in your home can actually lead to buying more stuff. For starters, you probably don’t know everything you have. Think you’re out of shampoo or conditioner? You very well may have a brand-new bottle crammed at the back of your bathroom vanity. Spend a couple of hours to clear your space of clutter and take inventory of what you already have. You may be surprised by what you find. Plus, you won’t be tempted to buy tons of organizing containers and other supplies because you don’t have any clutter. It can be an incredibly freeing experience while simultaneously leading to better long-term spending habits.

2. Reduce Your Food Spending

Another way to curb your spending is to be mindful of what you’re spending on food and make a concerted effort to slash that number. Start off by adding up everything you spent on food and dining out last month. Even if you reduce that number by 10 to 20 percent, you’ll notice huge savings over the course of a year. You don’t have to be a crazy couponer. Instead, try these simple hacks to reduce your food spending.

Prep Your Breakfast and Lunch

The Internet is brimming with easy, budget-friendly breakfast and lunch ideas that are designed to help you avoid picking something up, no matter how busy you are. You can go all out, making and freezing breakfast burritos for a week, or do something as simple as getting a bag of bagels rather than stopping at the bakery on your way to work.

Leftovers for lunch are always easy (and prevent you from growing a mold experiment in the back of your refrigerator) and it’s simple to keep some sandwich materials on hand. With so many grocery delivery services available, you can do your shopping in 15 minutes online, see how much you’re spending before you check out, and avoid last-minute impulse buys.

Preplan How Often You’ll Eat Out

Depending on your financial situation, you likely don’t need to deprive yourself of ever going out to eat again. If you’re regularly struggling to make ends meet, you may want to take a total hiatus until you regain your financial footing. But if you just want to curb your spending in general, all you need to do is set guidelines for yourself and follow them.

Maybe that means allowing yourself one happy hour a week and one night out with friends. Or perhaps you commit to a single family date night twice a month. Figure out how much you want to save each month and use that number to create your social calendar.

Shop Your Pantry

Chances are, you have some kind of pantry space holding non-perishable food items. Before you do your weekly grocery shopping (remember, online makes it easy!), first figure out what food you already have and use it to inspire your grocery list. Also note what may be going bad in your refrigerator soon, especially when it comes to fruit and vegetables. See how low you can get your grocery list by shopping your own kitchen first.

3. Hide Your Credit Cards

Credit cards make it all too tempting to buy things we don’t need or can’t afford. If you’re really having trouble curbing your spending, hide your credit cards. Stick them in a drawer or go the extra mile and freeze them in a bowl of water. To really do this well, however, you also have to go to your online accounts and delete your saved credit cards (Amazon Prime, we’re looking at you!). That way there’s no temptation whatsoever to mindlessly shop from your sofa while watching Netflix.

Have debt and overspending affected your credit score? Ovation Credit may be able to help. Reach out for a free consultation today.

truth about bankruptcy

The Truth About Bankruptcy — and What It Really Does to Your Credit

By | Bankruptcy

Filing for personal bankruptcy is often the culmination of years of financial struggle. Most people have already turned to a number of possible solutions to settle their debt problems without success. Bankruptcy is typically a last-resort decision, in which you legally petition a court to remove your existing debts. When the filing takes effect, you will then gain some breathing room — and the chance to rebuild your financial situation. However, because of the gravity of this step, realize that your credit will take a serious hit. It’s important to understand the truth about bankruptcy and its long-term effect on your credit. Here’s what you need to know before you take the plunge.

Immediate Effects to Score

When you file for bankruptcy, you can expect to see your credit score take a tumble — but the exact amount may depend on the score you currently hold. Generally, the lower your score is at the time of filing, the fewer points you stand to lose. Most of the time, a bankruptcy filer has already racked up a few adverse events on their credit report — such as a past-due item or collection activity — which means that a bankruptcy may not leave as substantial an impact. However, if your credit record is spotless and you boast a fairly solid score — such as between 600 and 700 — you may lose more than 200 points. Also, the total amount of debts discharged will play a part in the overall credit score slide. Someone who carried a significant amount of debt will likely experience a more substantial drop than someone who only had a couple of accounts involved.

Chapter 7 vs Chapter 13

The type of bankruptcy that you file won’t matter to your credit score. That means that the effect on your score will be the same, whether you file for Chapter 13 bankruptcy, in which you agree to repay a portion of your debts over an extended time period, or Chapter 7 bankruptcy, which simply obliterates the debts without any obligation of repayment. However, keep in mind that when potential lenders review your credit report in the future, they might view a Chapter 13 filing a bit more favorably than its counterpart.

Length of Time on Report

Bankruptcy will appear as a public record on your credit report. As long as it remains there, it will continue to affect your credit negatively. If you filed for Chapter 7 bankruptcy, the bankruptcy will be included on your report for 10 years after the date of filing. Chapter 13 filers will see all mentions of bankruptcy disappear after seven years. Any accounts that were included in the bankruptcy will be reported alongside a “discharged” or “included in bankruptcy” notation. The upside? Those accounts will no longer be reported as past due or unpaid.

Diminishing Effects

Each year that passes will lessen the negative impact of bankruptcy on your credit. Once the seven or 10 years expires, you can finally breathe a sigh of relief — the bankruptcy will automatically disappear from your report. Remember that you do not need to wait for the bankruptcy filing to fall off your credit report before you can begin to rebuild your credit. To speed up the credit-building process, make sure to practice sound financial management.

Repairing Credit After Bankruptcy

Rebuilding your credit after bankruptcy can seem like an overwhelming process. But the truth about bankruptcy is that plenty of people have gone on to achieve impressive credit scores, even after nearing the brink of financial ruin. The safest way to do this is through a secured credit card, which will require you to pay an upfront security deposit that will serve as your “credit limit.” Once you build a history of monthly on-time payments, you can begin to reverse some of the negative effects of bankruptcy. Loans are also available to post-bankruptcy filers and typically require either a deposit or collateral. Keep your total debt load low — ideally try not to let the amount of debt you’re using exceed 30 percent of your total available credit.

This Is Where We Shine

The truth about bankruptcy is that you will recover. Whether you’re considering filing, or just emerging from the process, contact us for a free consultation. Our team of credit gurus at Ovation Credit have helped hundreds of thousands of consumers repair their credit. We could be just the helping hand you need today.

Call Now for a FREE Credit Consultation