Can Medical Bills Hurt My Credit Scores?

Medical providers such as hospitals, doctors, and clinics don’t normally send information to the credit bureaus. Medical bills are not usually reported to the credit bureaus unless the bills have been either turned over or sold to a collection agency. Collection agencies contribute information to the credit bureaus and one of the key reasons is that it gives them leverage over the debtor to get a payment.

Do you have unpaid medical bills on your credit report? Visit here to see your credit report and credit score online now.

There is much controversy over the fairness of reporting unpaid medical bills to the credit bureaus. The issue of medical bills and the impact on credit has even come up in Congress and lawmakers have introduced bills promising to limit the dollar amount of the unpaid medical bills reported to the credit bureaus to only those over $2,500. In fact, the most recent promises to required the removal of all $0 medical collections from credit reports.

The reasoning behind these proposals is that medical bills result from an illness and not normally the irresponsible use credit. Both the insurance coverage and the type of illness/service influence your medical bills.   Since the length of time for the insurance company to adjust the bill can take months, the bill is already past due when the insured receives it.  If there is a dispute, it can take even longer.

Medical bills in collection

Collections are considered a severe delinquency and can deduct a substantial number of points from your credit score. Some credit scores ignore collections under $100, namely FICO 08.  VantageScore 3.0 does not consider paid collections, at all.  Their research suggests that paid collections did not predict that someone would default on an account as well as other credit entries.

Collections remain on your credit report for seven years from the date the original account went into default.  For example, if a medical bill went into default in July 2013 any collection associated with that account would have to be removed from a credit report no later than July 2020.

If you receive a bill from a doctor or hospital, contact your insurance company to verify what they are paying and if any additional adjustments can be made. If the bill is correct and you cannot pay, contact the doctor or hospital immediately to make payment arrangements. You need to do everything possible to avoid the account being sold to a collection agency.

Sometimes it’s better to pay the doctor so that he/she doesn’t place the bill with a collection agency and then argue with your insurance company to get the monies back.

Do you have unpaid medical bills on your credit report? Visit here to see your credit report and credit score online now.

Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  You can follow John on Twitter here.