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What Is the Impact of Medical Debt on Your Credit Score and How Can You Minimize It?

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The cost of medical treatment can be crippling even for Americans who have health insurance. revealed that according to a January 2016 survey by the New York Times in association with the Kaiser Family Foundation, 20% of Americans of working-age faced difficulty in paying off their medical bills in the previous 12 months, and out these people, 58% had been contacted by a collection agency while 11% were forced to file for bankruptcy, primarily due to medical debt.


Apart from facing difficulty in paying their medical bills, patients who receive such a large number of bills may find it impossible to manage them.

The important thing to understand is that not only are you obligated to pay the medical bills you have run up but also need to pay them on time, else there will be a negative impact on your credit score.

The Negative Impact on Credit Scores Due to Unpaid Medical Bills

Hospitals normally turn over bills remaining unpaid for more than 90 days to collection agencies who report it to the credit rating bureaus.

The negative impact in your credit score varies according to the policies followed by different rating bureaus; it is not unusual for a drop of 50-100 points for just one collection account reported. Once reported, you can expect the details to remain on your credit report for as long as seven years like any other unpaid debt.

The good news is that in a 2017 consensus, all the three major credit rating bureaus agreed to wait for 180 days after the report by a collection agency to make an entry in the debtor’s credit report.

Also, the bureaus agreed to remove medical debts from the consumer’s credit history if the collection agency reports that the insurance company is processing the payment or has made the payment. You can read debt settlement reviews for more information on how rating agencies work.

Different Credit Reports – Different Impacts

While FICO 9, the latest version being used, ignores collection accounts that have been paid off and even gives less weight to medical collection accounts, the more widely used FICO 8, factors in all collection accounts over $100. The Vantage Score 4.0 goes a step further and does not look at medical collection accounts that are less than six months old.

Additionally, it awards lesser penalties to medical debt as compared to other unpaid debt. Though the new credit scores make allowances for medical debt, most of the old ones do not differentiate between medical and non-medical debt so you need to take care to pay your medical bills in time. Even though there is a negative impact of medical debt on your credit score, there are ways by which you can minimize the effects so that it doesn’t destroy your credit.

Keep Track of Your Medical Bills

It can all be too easy for medical bills to remain unpaid because of the many complications like deductibles, co-pays and other quirks of insurance. Often a consumer simply may not be able to figure out if they actually owe something to the service provider.

Make it a habit to check your balance regularly after availing of any medical service with the service provider and the insurance company so that you can pay it off at the earliest. Also, check your mailbox for any bills or an Explanation of Benefits from your insurance company that will inform you if you owe the service provider any amount after the insurance settlement.

Make it a point to review the Explanation of Benefits thoroughly because if there is any error or you feel that something should have been paid by the insurance company and has not been, you can raise a dispute. Insist on getting an itemized bill so that you can understand what exactly for and how much you are being charged.

Negotiate with Debt Collectors

If you are contacted by a debt collector, first verify that it is a bill that you have left unpaid, not a scam. If you can pay off the amount quickly, you can bargain with them not to report it. Since only the newer credit scores take into cognizance the paid status of a collection account, you should try to convince the collection agency to delete it from your credit report; getting the commitment in writing is important to prevent them from going back on their word.

If you feel you have been the victim of unfair trade practices such as not having received the copy of the bill, you can contact the service provider to request them to pull it back from collection and pay them directly or file a complaint with the Consumer Financial Protection Bureau or even the Attorney General of your state.

Validate Your Debt

If you are contacted by a collection agency, the first thing you should do is to check if the dues are really yours. If you suspect that it is not, you can ask the debt to be validated in writing by the collection agency within 30 days under the provisions of the federal Fair Debt Collection Practices Act. The Act also empowers you to dispute it with the credit agencies.

Be Proactive on the Payment

When you know that the medical bill is too large for you to pay in full with the time allowed, you should approach the service provider and request a payment plan with which, you can pay the dues off in a mutually-acceptable period. If the provider agrees to a payment plan, get it in writing so that even if the debt does get reported for collections, you have a basis for disputing it. If a convenient payment plan cannot be worked out, consider medical credit cards that allow up to 24 months of interest-free period and charge low rates of interest for longer tenors.


It can be very easy to lose track of your medical bills if you do not try to stay on top of them with regular communication with your provider as well as the insurance company. Missing out on a bill only to have it sent for collections can not only be embarrassing but also injurious to your credit score so be sure to account for all your medical bills and pay them on time.


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