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Medical Bills on Your Credit Report

Credit Score, Personal Finance
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Everything you need to know about medical bills on your credit report

A serious illness or injury can be disruptive. You need to heal, and you may also be overwhelmed for a while as you put your work and family life back together.

Unfortunately, there’s a strong chance your finances will be affected by your stint in the hospital. If an unpaid medical bill makes its way to your credit reports, your credit scores could suffer for years.

Not sure how medical bills affect your credit and how to deal with the fallout if you end up in collections? Here’s more information.

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Do medical bills affect credit?

Unlike a bank or credit union, your doctor’s office probably doesn’t have a direct relationship with the three major credit bureaus. That means it’s not regularly reporting your payment information. The bureaus receive word about your medical debt only if it goes unpaid.

In that scenario, your medical provider will turn your debt over to a collections agency. The collector will then contact you and try to get you to pay. At this point, your unpaid bill is probably already showing up on your credit reports as having gone to collections.

This is where things get messy, because the information on your credit reports is used to create your credit scores. Failure to pay a bill affects the biggest portion of your credit scores: payment history. Consequently, having a medical bill in collections will probably result in serious damage to your credit scores.

What’s more, collections can take up to seven years to drop off of your credit report, although the impact on your credit score will lessen over time. In short, an unpaid medical bill could cause headaches for years.

The newest version of the FICO credit score, the FICO 9, will weigh medical bills in collections less heavily than other types of unpaid accounts. However, it may take some time for the FICO 9 to be in widespread use by lenders, so don’t expect any huge changes to your credit rating just yet.

Can I get a medical bill removed from my credit report?

If you have a medical bill in collections and it’s hurting your credit score, you’re probably wondering what you can do to have it removed. Unfortunately, assuming that the reporting is accurate — meaning you really didn’t pay the bill — there’s not a whole lot you can do.

The FICO 8, the credit scoring model most lenders rely on, treats paid and unpaid collections accounts the same. (The FICO 9 and the VantageScore 3.0, on the other hand, disregard collections accounts that have been paid.) This means that paying off the bill likely won’t improve your credit score — although it will get the bill collector off your back and remove the risk of being sued.

The best thing to do in this case is to be patient and continue good credit habits, like paying your other bills on time and keeping your credit card balances low. This will help your credit scores bounce back over time.

On the other hand, if a bill that you or your insurer paid went into collections by mistake, there are steps you can take to have it removed from your credit report:

  • Gather documentation. Collect as much documentation as you can that the bill was paid. Ask for payment records from your doctor’s office, find copies of canceled checks or dig up old credit card statements. Make copies of these documents and include the copies with your dispute letter.
  • Send written notice. Alert the credit bureaus that you’re disputing the collections. Send a letter to all of the bureaus that are reporting the error (make sure to check all three of your credit reports to figure out which ones received the wrong information). Explain the nature of the error and include the copies of your documentation.
  • Keep communicating. The Fair Credit Reporting Act requires the credit bureaus to follow up on all credit reporting error disputes. Keep communicating with the bureaus to check on the status of your dispute, and be prepared to provide additional documentation if requested.

There’s no guarantee that the error will be removed from your credit report, especially if you have spotty documentation and the doctor’s office isn’t on your side. But because poor credit scores can make borrowing money really expensive, it’s definitely worth a shot.

Prevent medical bills from landing on your credit report in the future

You can take steps to prevent future medical bills from affecting your credit.

Follow up with your insurance company: Know the ins and outs of your insurance policy and follow up by phone or email to be sure the company’s paying the bills it’s agreed to cover. Many people end up in collections because they assume their insurer paid a bill that it didn’t.

Negotiate unmanageable bills: When you can’t afford to pay a medical bill, it’s worthwhile to contact your medical provider and try to negotiate it down. If you’re successful, be sure to get the new amount you owe in writing. This way, you have a record of your agreement if a dispute arises.

Consider hiring a billing advocate: If you’re overwhelmed by your medical bills and aren’t sure how to proceed, think about hiring a medical billing advocate. This professional will sort through your bills and try to negotiate them on your behalf. The service might cost you a few hundred dollars, but it could save you thousands in the long run.

Crowdfund your medical bill: Set up a fundraiser with a crowdfunding site like GiveForward to get help with your bills from family, friends and strangers.

This article was updated on May 18, 2016. It originally published Aug. 19, 2014.

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