After serving at home or overseas, the last thing you want to think about is your credit score. Unfortunately, it's a deciding factor for many businesses and lenders assessing your creditworthiness. Thankfully, a proposed bill, if passed, would protect veterans' traditional credit ratings.
Protecting Veterans Credit Act
Congressman Randy Hultgren R-Illinois, John K. Delaney D-Maryland, Jackie Walorski R-Indiana and Krysten Sinema D-Arizona recently developed the Protecting Veterans Credit Act, which would prevent health care organizations from reporting debt accrued through the Department of Veterans Affairs' (VA) Veterans Choice Program for up to one year.
— eLobbyist (@eLobbyist) July 23, 2015
Basically, the VA has failed to pay participating physicians promptly, which is causing unpaid medical bills to build up. Then health centers and other facilities are reporting that debt to credit bureaus, hurting veterans' traditional credit scores even though they shouldn't have to shoulder the financial burden.
"In many cases, veterans are already using the choice program because they've endured a long wait time to be treated," said Delaney. "We shouldn't destroy their finances on top of that."
As Delaney mentioned in further comments, a credit rating is key to advancing one's financial standing. This is especially the case for younger veterans who may be thinking of buying a home, paying for a new car or financing necessary products. According to the VA, 8 percent of the 25 million veterans in the U.S. are between the ages of 25 and 34.
What other options are there?
Although the bill will help, many veterans are already suffering the consequences of the VA's inability to pay health centers. What can veterans do now to improve their credit scores?
In truth, traditional credit scores don't accurately indicate whether or not you're financially responsible. The agencies that develop these scores collect a limited amount of information, such as:
- Your credit and loan history
- How many different types of credit you have
- How much you owe credit card companies
- Whether you've paid credit cards and loan bills on time and in full
At first glance, you would imagine that's all they need to determine you're creditworthiness. That's hardly the case – what about all the bills you pay every month? Shouldn't those count in your credit score? Unfortunately, they don't.
Think about alternative credit solutions
Many lenders are recognizing the shortcomings of traditional credit ratings, and are accepting alternative credit scores to assess people's ability to pay back loans.
An alternative credit solution not only collects all the information counted in traditional credit scores but also bill payment data on the following items:
- Phone and internet
- Content subscriptions (Netflix, Hulu)
What's the advantage of including these details? Think of it this way: You pay your electric and water bills on time and in full every month. An alternative credit score, such as the one provided by PRBC, reflects this good behavior, giving business owners and lenders a complete picture of your financial profile. Instead of basing their decision on one set of data, they're doing so while referencing an accurate portfolio.
If you never miss a utility payment, there's no reason this behavior should be exempt from your credit score. if you want to know more about PRBC's alternative credit solutions, speak with one of our representatives today.