If you’ve ever applied for a security clearance, or even just tried to rent a home out of office, you know your credit history is important. Now imagine if you ever find out that your report says you owe money to a collection agency, all because of someone else’s mistake.
Sounds awful, right? Well, a Consumer Financial Protection Bureau (CFPB) report shows that many US service members are having their credit scores negatively affected by faulty or inaccurate reporting procedures through no fault of their own.
In 2021, service members reportedly submitted more than 42,700 complaints to the CFPB about inaccurate reports and their credit scores, a 5% increase from 2020 and a 19% increase from 2019. The complaints related to topics ranging from consumer credit reports to debt collection. faulty medical bills.
“Misreporting results in distinct harms to service members, including jeopardizing housing, transportation, and clearance status,” the report said. “The risk of these distinct harms makes service members particularly vulnerable to coercive credit reporting.”
Simply put: while military personnel especially need good credit to do their jobs, they now face distinct and unexpected challenges in maintaining that good credit caused by a simple misreporting.
Indeed, incorrect information on a credit report was the most commonly reported issue among service members, especially when it came to medical bills.
“It’s for a medical debt that I’m not responsible for,” according to one serviceman’s experience cited in the report. “The hospital where he allegedly came from had full access to our insurance information and was billed by our active duty military insurance… The insurance paid that debt. Now, [debt collector] tries to be paid twice by us as patients as well as by the hospital.
Another service member described a delay in payment from TRICARE to an ambulance company after a trip to a local emergency room resulted in notices being sent to a debt collection agency, even after payments were made. been treated.
Unfortunately for those affected, there is little recourse, as removing these faulty reports can be incredibly difficult. “Complaint analyzes also suggest that service members are receiving inadequate and incomplete responses to their consumer complaints,” according to the report.
So why do these erroneous reports keep popping up? Often, when service members must use civilian medical care or are referred to third-party providers for special procedures, complications and billing confusion can arise.
“Health care providers that do not routinely treat active duty military members may not have sufficient policies in place to handle TRICARE claims,” the report states. “Service members have reported that billing issues have occurred because private medical providers failed to collect key information for their TRICARE claims, associate their coverage with their account, or fail to submitted the complaint to TRICARE for processing.”
The problem of misreporting is even worse for reservists and members of the National Guard, who only have access to government-paid health insurance while serving on federal orders and generally rely on private insurance. at other times.
“CFPB has heard from reservists that vendors are billing the wrong entity due to confusion that reservists are not full-time military. Instead, they often send the bill directly to the military or directly to a collection agent,” according to the report.
This is also true for veterans receiving medical benefits from the VA. The CFPB has received complaints about instances where “non-VA medical providers wrongly refer bills that have been paid or should have been paid by the VA to third-party collection agencies.”
The transient nature of military service also contributes to the problem, according to the CFPB. Since service members travel and change duty stations frequently, they may miss billing notices that are sent to old addresses.
“[company 1] never contacted me because they used an address I haven’t lived in since 2018,” a member of a billing agency’s department wrote.
While the number of complaints flooding the CFPB has increased in recent years, potential solutions are on the way.
The Department of Veterans Affairs announced earlier this year that it would only report medical debt if all debt collection efforts had been exhausted and the agency had determined that a patient was not severely disabled and that the debt was over $25. This could reduce 99% of adverse debt reports arising from VA medical care.
The three largest credit reporting agencies, Equifax, Experian and TransUnion, announced in March 2022 that they would no longer list paid medical bills on credit reports and would no longer include medical collection debts below $500 in consumer reports.
Bad credit can impact soldiers and civilians alike, but because service members often depend on a positive credit report to stay in good standing with the military, something like a paid debt isn’t removed. or a medical bill is sent directly to a collection. instead of TRICARE can have a particularly negative impact.
“Many service members, including all officers, are required to pass national security clearance checks that include detailed reviews of their credit history,” the CFPB explains. “Because of the reliance placed on a service member’s report, it is imperative that their reports be accurate.”
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