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The Weight of Medical Debt on American Credit Scores

A recent national survey conducted by Debt.com has uncovered alarming insights about the intersection of medical debt and credit scores in America. The survey reveals that a significant 91% of individuals burdened with medical debt believe that such financial obligations should not appear on their credit reports. This sentiment comes in the aftermath of a rule implementation by the Consumer Financial Protection Bureau (CFPB), aiming to provide more protection against the negative implications of medical debt on credit scores.

The findings are based on the responses of 682 U.S. adults, particularly highlighting the struggles faced by those with medical debt. Interestingly, over half of the respondents stated that their medical bills have already caused harm to their credit scores, with some individuals experiencing drops of more than 100 points.

Understanding the Concerns

Howard Dvorkin, the CPA and Chairman of Debt.com, states, "We don't penalize people for getting sick, but that's exactly what happens when medical debt lowers their credit scores." This perspective is echoed by many survey participants who argue that medical debt is often an unavoidable reality, not a reflection of financial irresponsibility. About 30% of respondents mentioned that medical debts do not accurately represent their financial health, while an additional 10% indicated that the complexities of the current system render credit scoring unreliable.

The survey highlights the prevalence of medical debt in the lives of ordinary Americans:

• - 51% of the respondents currently owe medical debt.
• - 59% admitted to delaying or forgoing necessary medical care due to financial constraints.
• - 20% report owing upwards of $10,000.
• - 9% find themselves in even deeper financial trouble, with debts exceeding $50,000.

Among those who reported their credit scores were affected by medical debt:

• - 30% experienced a decline between 50 to 100 points.
• - 14% felt the impact even more severely, with drops surpassing 100 points.

The Broader Financial Impact

Don Silvesti, President of Debt.com, emphasizes that medical debt extends its repercussions beyond credit scores. He points out, "It drains savings, delays goals, and forces people to make impossible choices between their health and their finances." Many survey respondents have had to make significant sacrifices in order to manage their medical debt. The findings indicate:

• - 36% had to deplete their emergency savings.
• - 26% resorted to withdrawing from retirement funds.
• - 26% charged their medical expenses to credit cards.
• - 17% found it increasingly difficult to pay for essentials such as rent, utilities, and food.

As inflation persists, 86% of participants affirm that the burden of medical debt has intensively increased. This financial strain translates into real-life consequences; 57% expressed that their debts have obstructed critical life milestones such as pursuing higher education, marrying, buying a home, or starting a family. Millennials appear to be the worst hit, with 62% indicating that medical debt is a considerable roadblock in their lives.

Looking Forward: A Call for Action

The survey conducted by Debt.com illustrates a urgent cry from Americans who oppose any dismantling of the CFBC's medical debt protections. Respondents demand actionable solutions that provide real assistance and recognize the financial realities of medical emergencies. The findings underscore the need for systemic change in how medical debts are treated and their impact on credit scores.

About Debt.com

Debt.com serves as a pivotal resource for personal finance education and debt management solutions. Through collaborations with certified credit counselors and financial specialists, Debt.com assists individuals in navigating challenges tied to credit, budgeting, and loans.