“Managing Medical Debt: Tips to Protect Your Credit Score”

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Do Medical Bills Hurt Your Credit?

Medical bills won’t impact your credit as long as they are paid on time. However, unpaid medical debt is treated differently from other types of consumer debt. Most healthcare providers don’t report to credit bureaus, so your debt must be sold to a collection agency before it appears on your credit report. Typically, medical providers wait 60, 90, or even 120 days before selling the debt, depending on the provider.

Even after your bill goes to collections, it won’t immediately show up on your credit report. The three main credit bureaus—Experian, TransUnion, and Equifax—offer a 365-day waiting period to resolve any medical debt before it appears on your credit history. This means unpaid medical bills won’t impact your credit score right away, and if the initial reported collection account balance is under $500, it won’t appear on your credit report at all.

Can Medical Bills Be Removed From My Credit Report?

If you find inaccuracies or fraudulent medical collections on your credit report, you have the right to dispute them with the credit bureaus. Contact the collection agency and the medical provider as well. If the dispute is resolved in your favor, the accounts can be updated or removed from your credit report. Disputes are free to file and must be filed separately with each bureau that lists the incorrect information. Be prepared to provide evidence, such as records from the collection agency, insurance company, or healthcare provider, and copies of canceled checks or credit card statements showing the bill has been paid.

Does Paying Off Medical Collections Improve Credit?

Paying off legitimate medical debt can significantly improve your credit scores. Unpaid medical collection accounts over $500 can appear on your credit reports and affect your scores for up to seven years. However, once you or your insurance company pays off a medical bill in collections, the account will be removed from your credit reports, positively impacting your credit score.

What to Do if You Can’t Pay Your Medical Bills

If you can’t pay your medical bills on time, consider the following options:

• Negotiate your medical bills: Healthcare providers may offer discounts if you agree to pay a lower amount in full or make a large down payment and pay the rest over time.
• Set up a repayment plan: Your healthcare provider may allow you to break the bill into monthly payments, making it more manageable for your budget. Be aware that interest or fees may be added to the original bill.
• Hire a medical billing advocate: These professionals work with healthcare providers and insurance companies to resolve medical bills on your behalf. Although the service isn’t free, it can save you thousands of dollars and hours of time.
• Seek financial assistance: Depending on your income, you may qualify for help from Medicaid, local or state programs, religious groups, nonprofit organizations, or charities.
• Use a personal loan or credit card: These should be last-resort options due to the interest incurred. Avoid loans secured by your home or other assets, as you could lose them if you default. If using a credit card, choose one with a lengthy 0% APR introductory offer and aim to pay off the debt before the higher rate kicks in.

Keep Your Credit Score Healthy

Even with a collection account on your credit report, you can still improve your credit score. Make all debt payments on time, keep credit card balances low, and avoid applying for new credit unless necessary. Regularly check your credit report and score to spot any medical debt that has gone to collections or any fraudulent activity. You can get a free copy of your credit report from all three credit bureaus through AnnualCreditReport.com. Once the medical debt is paid off, ensure your credit report no longer shows the account. Monitor your credit score’s health by setting up free credit monitoring.

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