By David Holt
Your credit score is important. If you want to buy a house, get a new credit card or even apply for a job, you should expect that someone will take a look at your credit report. And medical bills can cause big headaches when it comes to your credit score. Scores are based on the information in credit reports, and the Consumer Financial Protection Bureau reports that 43 million Americans have some kind of medical debt on their credit report.
As a health care attorney, I hear questions almost every day about how medical bills affect credit. Here are a few of the most common questions:
Can medical bills affect my credit score?
In short, yes. Health care providers typically do not report payment information to the big credit reporting bureaus (Equifax, Experian, and TransUnion) — but they will if a bill goes unpaid. However, credit bureaus will wait 180 days before adding any medical debt to consumers’ credit reports. This gives patients time to receive their bills and hopefully pay them off. Makes sense, right?
The bad news is that if you can’t pay your bill, that will be reflected on your report. It’s considered part of your payment history, which is the biggest factor in your credit score. The good news is that medical debt is so common that it is often given less weight. Further, medical collections accounts paid by health insurers will fall off your credit report. Speak with a credit specialist in your area if your credit score is not where it should be.
How do I dispute an inaccurate medical bill on my credit report?
Medical bills are often plagued with errors, and it is in your best interest to examine your bill for mistakes. If a medical billing error makes it to your credit report, dispute the error with the credit bureau.
Each bureau allows you to dispute inaccurate information on your report, and you can file a dispute online. A credit bureau has 30 days to either respond with proof of the debt in question or remove it. If things really heat up, you can file a complaint with the Federal Trade Commission.
In a similar scenario, there may not necessarily be an error on a medical bill or credit report, but the health care provider never sent you a bill in the first place. You were able to pay, but you simply didn’t know there was an outstanding medical bill. Call the provider immediately to get this resolved. Also have the health care provider help you undo any damage to your credit report. Mistakes happen, and it’s on you to be sure they don’t go unnoticed. You must be an advocate for yourself.
How do I keep medical bills off my credit report in the future?
As in football, the best defense is a good offense. Be proactive with debt: Do not allow bills to pile up or become overwhelming. Take care of them as soon as they come in so you don’t forget about them and end up with a delinquency on your report.
That said, I have seen many cases in which a bill is simply more than the patient can afford to pay. This is where you need to advocate for yourself, as there are ways to reduce your medical bills before you have to pay.
When you are working with debt collectors, always clarify what your payments will do to your credit score. Consider getting an experienced advocate for negotiating and preserving your credit score with outstanding medical debt.
The hard truth is that medical bills can damage your credit score, but people with medical debt can advocate for themselves to protect their credit. It is by no means easy, but I am confident you can do it.
David Holt is an attorney with a focus on healthcare. He wrote this piece for NerdWallet’s Ask an Advisor feature.