Medical bills can be stressful, and they can damage your credit. The damage can be drastic. Hospitals don’t normally report a medical bill dues to credit reporting agencies. Practically they hire a debt collector and send those unpaid debts to them. Ultimately the collection agency reports them about the status of their debts.
In fact, as per the Consumer Financial Protection Bureau, half of all collection accounts on credit reports are practically medical bills. Those credit accounts surely hurt the consumer’s credit. A single collection account can drop 50 to 100 points straight.
Many people don’t know how painfully a medical bill can be to their credit. They don’t realize some facts:
a. Even you pay your medical bill, it may be sent to collections. Many people have this misconception that after paying a part of the bill, their creditors won’t send the debt to a collection agency. That’s a false statement.
b. Medical bills can be sent to a collection agency way before the patient even gets his bill. By the time he gets it, the damage has been done.
c. Collection accounts are normally hurt your credit score even those are medical bill debt accounts or not.
d. The collection agency will not fix your credit even after you pay off the debt. In several cases, those collection accounts are reported for 7.5 years. For this long time, they will surely damage your creditworthiness a lot.
e. The size of your medical debt is not that important. The most important thing is the status of your debt. A small amount of medical debt can help a collection agency to harm your credit score.
It is difficult for you to review your credit reports annually or to check it on a regular basis. You can get a free credit report and score, regularly updated from Credit.com. As per the survey conducted by Credit.com revealed - 10% of the people who reviewed their credit reports found several collection account they didn’t pay off.
How to maintain a healthy credit score
1. Before those medical bills go for collections, if possible, be very careful and active about your medical bills. Even if you have a health insurance, don’t think every aspect will be taken care of. Review what type of benefits you are getting and carefully check them. You may contact the insurance company asap if it’s not being taken care of.
2. If a collection agency contacts you about a medical bill, ask them not to report it if you are paying it off. Think if you have all the details on the bill. Many collection agencies will listen to you and won’t report if you pay the bill quickly.
3. Updating your collection account “paid” will not boost your score, unless your lender will use the newer credit score versions. So, look for any errors and disputed items, try to remove them if possible. Some agencies will help you, others may ignore them.
4. If you feel that the agency is playing an unfair game with you - as you’re not getting a copy of the bill, you can try to solve the issue in two separate ways. First - you may file a complaint with the Consumer Financial Protection Bureau. Second - you may contact the original provider and ask him to pull it back from the collection agency. After that, you can pay it off directly. If the lender agrees, the account will not be reported normally.
5. If a collection agency contacted you and you truly believe you don’t have a medical bill that can be collected, you have the right under the Fair Debt Collection Practices Act to report against that collection agency. You may also ask the agency to validate the debt. You also have the right under the Fair Credit Reporting Act to send a report to the credit reporting agencies for disputing the account.