A low credit score can have significant consequences. It determines the interest rates on your credit cards and loans, how much you pay for insurance and can also impact your ability to open a bank account. You should review your credit report several times per year to make sure that there no errors that could have a negative impact on your score. This is also a good time to review for any potential fraud, such as someone who opened up a new account using your social security number.
Often, financial hardship is the result of unexpected medical bills. One in five households have medical related debt. One result of late medical bill payments is a lower credit score. Beginning in July 2022, the 3 major reporting agencies are making changes to the way they calculate credit scores. These changes include removing approximately 70% of medical debt and increasing the grace period on medical debt from six months to twelve months. Beginning in 2023, they will no longer report on any past due medical bills that are under $500.