When a person owes money to a doctor or to a hospital, it generally does not show up on his or her credit screening report as long as he or she is current on making payments on the medical debt. As part of our tenant screening process, any medical bills on a potential tenant’s credit report will be disclosed to you.
Medical bills on credit report statements can cause concern for a landlord, since a large number of major medical bills may indicate a person's an inability, or unwillingness, to pay bills. In addition, high unpaid balances may indicate possible bankruptcy in the future. When there is a finding of medical bills in medical collections on credit report results, further research on the landlord's part is needed since the status of the medical bills is not always shown.
Neither the Fair Debt Collection Practices Act, nor the Fair Credit Reporting Act, require a medical provider to notify a patient before turning a delinquent account over to collections. Often, a medical bill can go into collections because it is under dispute. The most frequent reason for disputed bills is when parties involved are arguing the claim that is being made. There can be a variety of reasons for disputes and it does not necessarily mean that a bill was sent to collections due to non-payment.
Many medical practices and hospitals use independent contractors to process their medical billing. These large billing companies can often make mistakes without the knowledge of the medical practitioner or hospital. So when a medical debt on credit report shows up for a prospective tenant, you may not be getting the whole picture. The potential tenant may not even be aware that the item appears on his or her credit report. If the medical account has gone into collections, the potential tenant might have an idea that the item is on their credit report, but he or she may not have been notified.
Many people are not aware that they can request that an explanatory statement be entered on their credit report with a credit bureau. Anyone can write an explanatory statement regarding payment for medical records and have that statement entered onto a credit report. As a landlord, it is important to wait until you have the necessary information to let medical bills on credit report forms affect your decision on a potential tenant.
You may want to ask the tenant to give you the status of the medical debt. You cannot require a potential tenant to give you details, but you can request them. If an applicant has a good payment record for all other obligations, the medical bills might have been reported simply because the amount owed is a large sum. This could happen even if payments are up to date.
Every level of tenant screening offered by LandLordStation.com includes medical bills on credit report results in order for you to have the most information possible on a prospective tenant. As previously discussed, medical bills are a different type of debt. You will have to use your best judgment and take the payment history and pattern for all the disclosed debt into consideration.
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