Repairing credit can be a challenging process for consumers who aren’t familiar with the loopholes. Credit repair companies dispute repos, evictions, tax liens, bankruptcy, student loans and hard inquires to the credit bureaus for you. Repairing credit yourself may involve sending a letter to one of the credit bureaus and politely asking them to investigate and remove an inquiry from your credit report. Anything a credit repair company can do legally, you can do yourself at no cost. Created by finance expert Dave Ramsey, Debt Avalanche and Debt Snowball strategies are other methods that can eliminate debt and save money on interest fees.
Never Pay your Medical Bill
According to CNBC, 28% of Americans owe $10,000 or more in medical expenses. So what’s the point of insurance again? Hospitals write off your unpaid debt during tax season and receive a pay out from their insurance companies. As hospitals receive their reimbursements from their insurance companies they turn around and sell that medical bill to collection agencies for pennies on the dollar(Paying $40 for $1,000 worth of debt). You will have TWO options. Negotiate your bill to pay a lesser amount or don’t pay at all. If a collection agency request debts to be paid via letter or over the phone NEVER admit the debt is yours and NEVER agree to pay. Collection agencies might be committing illegal practices without your knowledge so it’s important to learn the rules. You must reply and request a debt validation letter which proves the debt is legitimate and that it belongs to you. All medical collections must contain a Health Insurance Portability and Accountability Act release form (HIPAA) which allows patients to authorize their health provider to distribute information to a third party (Collections) of their selection. If the HIPAA release form is absent, in return you must send a HIPAA violation form. It’s illegal for hospitals to inform or send medical records to collection agencies without you signing any contract to do so and collection files must be dismissed if violated. File a HIPAA dispute or a Office of Civil Rights(OCR) within a 180-day time frame.
Negotiate your Debt
NEVER pay the full amount. Administrators can also code errors and often times will inflate the costs of your medical procedures. Simply research the bill on sites like Healthcare Bluebook, CarePay, and FAIR Health to compare the average costs of your medical procedure at other health care institutions. Now If your billing information is correct, you signed forms at the time of treatment, and you did your due diligence then it’s time to pay up. Pick up the phone and be respectful to the collection agency or hospital, tell the truth and exaggerate your situation. Expound to them that you’re out of work due to the pandemic or any other believable excuse and you’d like to pay a reasonable amount. Again, be very polite and consistent! In many cases I hear my peers negotiated their bills from $5,297 to $1,801, $25,305 to $4,575, and $3,200 to $500. Just ask.
Disputes
According to the FTC or Federal Trade Commission, 79% of ALL credit reports contain errors and can be removed or challenged within the first 24 months if proven inaccurate. Based on the Florida’s Statute of Limitations, credit card companies can no longer sue you for the debt you owe them after five years. Mailing your dispute will be the most effective option. In your letter, you must include the most current information on your credit report, date of birth, social security number, name, and address must be with correct spelling, documents that shows proof of claim, instructions for the bureaus on what to do about the situation, and a copy of your ID. Credit bureaus utilizes an e-Oscar system which is an automated software that proof reads the letter for effectiveness. So don’t copy your letter from the internet and dispute with the bureau that reported the inquiry. Send the letters to the following addresses below:
Equifax PO Box 740256 Atlanta, GA 30374-0256
Experian PO Box 9701 Allen, TX 75013
TransUnion PO Box 2000 Chester, PA 19016
Debt Avalanche
Higher interest rate to the lowest interest rate
The Debt Avalanche method is one way to reduce debt by paying off your balance with the higher interest rate first. Mathematically speaking, you’ll save more on interest fees.
List all of your outstanding debts and organize them from largest interest rate to the smallest interest rate. *Be sure to include the minimum payments
Pay the minimum for every debt you own except the one with the highest interest. For example, instead of paying the minimum of $50 pay between $80-$100 every pay period.
Pay down and eliminate the debt with the higher interest rate and then repeat until all debt is paid.
Debt Snowball
Debt Snowball in my opinion is the best option and easiest to manage. This method requires you to pay off your debts starting with the lowest balance first. Eliminating the smallest debt will result with quick pay offs and keeps you motivated.
Make a $50 payment for Credit Card #2
List your debts from smallest to largest balance and include the minimum payments due.
Pay the minimum for all of your balances except for the least amount. For the figure above it will be Credit Card #2.
Pay more towards the smallest debt or pay twice as much each pay period
Snowball until you’re debt free.
5 Factors of Credit
Understanding and mastering the 5 factors of credit can make or break your score. Learn more about increasing your credit score here http://audiencesabsorb.com/2020/07/17/this-is-how-i-received-an-800-credit-score/
Payment History: Simply pay all of your bills on time
Utilization Ratio: Increase your credit limits and use up to 30% of your total balance
Age of Credit History: use your credit and keep them active
Credit Mix: if necessary, use multiple lines of credit
Total Inquires: The least impact. Monitor your inquires
Always A Way Around It
For every problematic issue with debt, there’s a solution. Know your rights and the hidden rules related to consumer debt so you can increase your score. It’s possible to delete medical debt to its entirety or pay a significantly smaller amount. With the power of credit, you’re able to leverage good debt and create assets in the financial world.
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