Medical Bills on Credit Report
How to Remove Medical Bills from Your Credit Report
Credit scores are tarnished in a variety of ways. For some, the low score is a result of negligence and overspending, but for others, the reasons are often completely out of their control. There are cases where consumers with a solid history of on-time payments and responsible financial behavior suddenly have a solid credit track record destroyed due to an unforeseen medical event.
Even those who are gainfully employed with adequate health insurance coverage can fall prey to this predicament in some extreme circumstances, where costly surgeries or extensive medical treatments and medications are required to address a serious health concern. This is disheartening, to say the least.
The healthiest among us need to be prepared when it comes to high medical bills and our credit, and you should arm yourself with the facts now, so you are prepared to protect your credit score if this situation arises.
How Medical Bills Affect Your Credit
Here’s what we know and cannot dispute about credit scores: payment history is the single most influential factor when it comes to determining your credit score. Therefore, if you fail to pay a medical bill (or any bill, really) on time, your credit score will always be in danger.
FICO credit scores are based on a number of different categories, but payment history always remains at the top, and this is unlikely ever to change. And whether you “anticipate” the medical expenses or not, they will be a reality at some point in your lifetime. One of the best things you can do is to plan and budget for them, and this may mean seeking alternate ways to pay them, rather than just relying on your already maxed out credit cards.
If your employer offers any pre-tax incentives for medical savings accounts, where you are given the opportunity to put aside a portion of your paycheck (before taxes) that can be used to pay for qualifying medical expenses, you should certainly take advantage of this. Granted, you may not be putting aside tens of thousands of dollars for surgery, but every little bit will help!
Paying for standard medical office visits out of such accounts (rather than charging them to already overloaded credit cards) may help you avoid medical bills stacking up, going to collections, and hurting your credit score. If your employer does not offer this option, you may also consider establishing your own savings account specifically for medical expenses. Some food for credit thought!
The Changes in 2017: Good News for Consumers
There is one really bright spot for all of us when it comes to medical collections and credit scores. In 2017, the rules were changed so that the three major credit reporting bureaus set a 180-day waiting period BEFORE adding your medical debt to your consumer credit report. This means there is a longer period of time granted for you to resolve any issues that may boil down to some confusion between your insurer and the medical office in which you were seen.
Also, the three major credit bureaus will remove medical debt from your credit report once the insurer pays it.
If you’ve never experienced a problem resolving a medical insurance claim…you are also probably a unicorn! This is an incredibly common occurrence, and many people have to spend months chasing down an answer or resolution when this happens.
It would be a shame for this to have a negative impact on your credit report when you didn’t pay for a $100 medical charge because you were certain it was the responsibility of the insurance company. This 180-day waiting period gives consumers more time to straighten these issues out before they become damaging blemishes on a credit report and affect your credit score.
Unpaid Medical Collections
When unpaid medical bills are sent to collections agencies, consumers may find themselves wondering “should I go ahead and pay this bill?” The answer to this question is complicated at best. Debt collection is by no means a one-size-fits-all science, and sometimes what seems like the most obvious choice (just pay the darn bill!) can end up backfiring on the individual in the long run. Making a partial payment on an unpaid debt in medical collections can reset the clock as far as a statute of limitation goes (and this scenario works in favor of the collections agency, NOT the consumer.
You don’t necessarily want to rush to act on this debt; rather, take your time to consider whether it is a valid charge or bill. For example, were you unfairly sent to medical collections when your health insurance company should have paid for the medical services provided?
How to Remove Medical Collections from your Credit Report
If you are thinking the news about medical collections and your credit report is all doom and gloom, there is indeed some light at the end of the tunnel. Credit reports are not permanently etched in stone, and there are ways for you as a consumer to challenge and remove negative items such as medical collections on your credit report.
By doing so, you may be able to achieve significant improvements in your overall credit score. And perhaps this means a much-needed loan will be possible for you to secure in the future (with some reasonable interest rates as well.)
Consumers have a variety of ways to remove negative items from their credit reports, whether they take the initiative to dispute reports on their own or work with a reputable firm with credit expertise (such as Lexington Law). Just because a medical collections issue reared its ugly head on your credit report does not mean it has to stay there permanently. You owe it to yourself (and to your credit score!) to investigate whether you can have medical collections removed from your credit report.
Disputing Medical Collections
When you are ready to dispute a medical collections issue on your credit report, there are a number of different factors you will need to consider and steps you will need to take.
Step 1: Write to the Collections Agency and Demand Validation
The very first thing you can do when attempting to dispute medical collections in your credit report is to send a letter that will create an actionable paper trail. Here’s how you do it: in your letter state that you want the medical collections agency to validate that this unpaid medical debt actually belongs to you.
State in your letter that if they cannot validate the charge, you want the collection to be removed from your report. Be sure to also stipulate in your letter that you want a response from them within 30 days.
Step 2: Break out the Magnifying Glass and Look for Errors
If step one didn’t yield a result in that works your favor (they validated the debt and/or responded to your letter within the stated 30-day period), then your next step is to obtain a copy of your credit report and look for ANY inaccuracies.
A quick tip, because the good news hasn’t stopped: did you know you are entitled to a FREE copy of your credit report once every twelve months?
Once you have the credit report in hand, review it carefully for even the smallest and most minor inaccuracies. Consider all of the dates, names, balanced owed…everything. If you spot any errors in the credit report, you can and should dispute this with the credit bureau. The credit bureau will, in turn, be responsible for investigating the errors on their end, and if they cannot ultimately verify the information, it is possible they will drop the medical collections from your credit report.
Bear in mind this is only a possibility, and we did not say it was a probability. But it is still worth exploring as it may mean an improved credit score awaits in your future.
Step 3: Ask for Help!
If this process of disputing medical collections has left you feeling you have bitten off more than you can chew, it may be time to seek the help and guidance of a professional. These are difficult waters for an individual consumer to navigate alone, and it may work in your interest to seek the guidance and expertise of a firm with much more knowledge than you on credit scores, medical debt collections, and how the two are related.
Medical Bills Destroying Credit
When it comes to Americans filing for personal bankruptcy, medical expenses are cited as the overwhelming number one cause. Medical expenses can absolutely break any of us, destroying our credit scores and our overall financial health. And what a slap in the face this can be to someone who is already riddled with anxiety, worry, and fear over a serious medical condition: suddenly you have added to that burden with the additional stress of unpaid medical bills and a potentially damaged credit history.
No one is completely immune to the possibility of massive and unexpected medical expenses; however, there are certainly some proactive steps we can take to mitigate the situation if and when it arises. Here are some useful tips on what you can do if you find yourself nearing the point where medical bills may destroy your credit score:
- You Don’t Know Until You Ask! Call the medical offices where you owe unpaid bills and ask to speak to a representative from the office’s billing department. If you explain your unique position and ask about your options, the medical office may be willing to work with you on a plan to pay down your debt, BEFORE sending your bill to a collection agency.
They may not say yes to your request, but you certainly won’t know until you try! You owe it to yourself (and your credit history) to give this a shot. And of course, the best time to ask about payment plans is BEFORE services are rendered, if you really want to get ahead of this and avoid medical collections.
- Keep a Close Eye on Your Credit Report! It is incredibly important that you watch your report closely for errors when it comes to medical bills and medical collections. You should make it a habit of watching your credit report closely for errors with ANY unpaid accounts, medical or otherwise. If you find and successfully dispute an error in your credit report, you will ultimately see significant improvements in your credit score!
- Pay Your Medical (and all) Bills on Time. It may seem we are overstating the obvious here, but we would be remiss if we did not emphasize this important point at every possible opportunity! Paying your bills on time, every time will ensure and sustain your overall credit health for years to come. This is the best thing you can do to protect your credit score.
Lexington Law is one of the most respected and reputable credit repair companies in the industry, and for very good reason. Lexington Law has more than 14 years of experience and has served more than half a million clients to date.
If you're overwhelmed by efforts to manage your unpaid credit debt, unsure of how to respond to collections agencies, or working to improve a bad credit score, contact Lexington Law and take advantage of a free initial consultation and case evaluation.