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Medical Bills and Credit Scores
Can Medical Bills Affect Credit Scores?
Medical bills can potentially be very costly and difficult to settle. Patients have to deal with doctor and hospital bills, plus it can involve health insurance providers who may lag when having to pay these bills. Typically, when that happens, the delinquent amounts are handed to collection agencies, which reflect a negative credit activity in the individual's credit report. This can indicate a high credit risk, thus generating a low credit score.
Even if delinquent amounts are paid and marked as such on a credit report, it is not erased from the report for 7 years, unless proven to be a factual error.
How Can a Medical Bill Affect My Credit?
While it certainly is not uncommon for medical collections to appear on people¿s credit reports, how it affects credit depends on a lender¿s discretion. Institutions vary as to how to deal with a person¿s medical bills.
In instances where you are attempting to finance or refinance a home loan, it depends on the mortgage company¿s underwriting criteria as to whether medical collections must be paid off as a stipulation for approval.
What Can I Do to Maintain Good Credit?
Even though you have health insurance, you are ultimately responsible for your own medical bills. If your health provider denies coverage, you may not even be aware of it until the doctor has submitted the bill to collections. Periodically running a report from all 3 credit bureaus is a good way to stay abreast of your credit activity.
What Can I Do About Unpaid Medical Bills that Show Up on My Credit Report?
If you notice unpaid medical bills on your credit report, you have 4 options:
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Pay the amount of the bill
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Dispute the bill as a clerical error with the credit reporting agency
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Explain the bill with a consumer statement that the credit reporting agency will attach to your credit report
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Ignore the bill
In most instances, a lawyer is extremely useful in negotiating with collection agencies to either work out a payment that you can afford, disputing erroneous bills, or writing an explanation of the situation that can be attached to your credit report.
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