You've done everything right. You had your service pre-authorized, you remembered to bring your insurance card, you paid your deductible — you’re a good patient. But when the doctor’s office attempts to file a claim to cover the cost of services, the insurance company refuses to pay. Now the doctor’s office is after you for payment.

This story is all too common and can lead to medical collections polluting your credit reports and negatively impacting your credit scores. But it wasn’t your fault, clearly. So should medical collections be counted in your credit scores? As of today, they are. And they’re counted exactly the same as a collection for any other unpaid debt. The consumer is screaming foul, but is his anger justified?

There are two sides to this argument. The consumer side, which clearly believes that medical debts should not even be reported to the credit bureaus in the first place. Then there’s the industry side, which believes there is empirical value to the collection, regardless of why it’s on your credit reports.

FICO partially addressed this issue with FICO 08, which ignores all collections with an original amount less than $100. But does that go far enough? Maybe, maybe not. I would argue that it’s not FICO’s place to get involved with credit reporting issues. That’s not their “sandbox.” This is a credit bureau issue clear as day.

The Medical Debt Relief Act would require the credit bureaus to purge medical collections that are paid or settled, regardless of how old they are. This is a clear win for the consumer but is it a loss for the lenders who depend on full and accurate credit reporting to make loan decisions? Is there a difference between an insurance snafu like the one above and a consumer who wrote a bad check for his deductible? Of course there is. One would seem to be a more elevated credit risk than the other. But from a credit reporting perspective, they look identical. So, removing both collections when paid or settled would be good and bad, right?

This is a slippery slope. Already insurance regulators have watered down what can be used from a credit report to calculate your insurance risk score. In some states inquiries can’t be counted while in other states they’re fair game. Nobody has ever argued that inquiries are not predictive of elevated risk. This was a political decision plain and simple. What’s next? Can’t consider foreclosures, bankruptcies, charge offs, or repossessions? If so, what’s the point of your lender buying a credit report?

And for those of you who would love to see this Brave New World sans credit reports and scores, best of luck trying to get any loan of any type. You’ll find yourself making 50% down payments and paying 75% interest to subsidize the risk. The grass isn’t always greener on the other side, my friends. Beware the restrictions on credit reporting.

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.