Is a credit report a reflection of financial planning & responsibility or a report of luck & genetic fortitude?

As employers increasingly rely upon credit reports for low skill and entry-level office positions, we must assess what information these reports provide. Are credit reports indeed accurate reflections of financial planning skills? A recent study by the Federal Reserve Board suggests otherwise. Their report found that nearly half of all collection actions appearing on consumer credit reports are for unpaid medical bills. (

While paying medical bills is an important responsibility, I believe that we can all accept that this responsibility is not as evenly borne as the decision to purchase clothes and other consumer goods. Accordingly, credit scores and reports may have become, at least partially, a reflection of personal health than a reflection of one’s financial management skills.  The first retort from some may be that the credit report still serves a valuable signaling purpose in that financially responsible individuals will select high quality health insurance and manage their health risks appropriately. However, insurance costs, caused by the underlying cost of service, are often prohibitively high for individuals with known preexisting conditions. Accordingly, such individuals, and even the most risk averse financial planners, are forced to select plans that cover only a portion of the total cost of care.

Given that medical bills can be reflected on a credit report, employers can use credit reports to discriminate against individuals with serious health concerns. Disturbingly, this would effectively circumvent the Americans with Disabilities Act. In fact, given the aforementioned Federal Reserve study, any employer reliance on an aggregate credit score may have this exact effect, whether intended or otherwise. Economists and lawyers should further study this effect, attempt to isolate trends, and restructure reporting laws accordingly.

For those interested in this topic, the following website has great information on the interaction between HIPAA and the credit reporting laws:

Dave represents clients in Minnesota on a range of legal issues, including civil litigation, business ventures, and creditor relations. He also has expertise raising capital to finance David v. Goliath cases. (Yes, pun intended!) Dave can be reached via email at

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