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 payments are not made, the delinquent amounts are handed to collection agencies, which reflect 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 several years, unless proven to be a factual error.
How Can a Medical Bill Affect My Credit?
While it is certainly not uncommon for medical collections to appear on credit reports, how it affects credit is left at the discretion of the lender. Institutions all vary as to how to deal with a person's medical bills.
Similarly, where someone is attempting to finance or refinance a home loan, it depends on the underwriting criteria of the mortgage company as to whether medical collections must be paid off as a stipulation for approval.
What Can I Do to Maintain Good Credit?
Even though someone may have health insurance, that person alone is ultimately responsible for their own medical bills. If a health provider denies coverage, that person 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 credit activity.
What Can I Do About Unpaid Medical Bills that Show Up on My Credit Report?
After noticing an unpaid medical bills on a credit report, there are 4 options:
- Pay the amount of the bill
- Dispute the bill as a clerical error with the credit reporting agency
- Explain the bill with a consumer statement that the credit reporting agency will attach to your credit report
- Ignore the bill
Should I Speak with a Lawyer to Help Make a Decision?
In most instances, a consumer 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.