When you’re sick or injured enough to need significant medical care, the last thing you want to think about is how you’re going to pay your medical bills. Even more distressful is just how much medical bills on your credit report can impact your financial future.

medical bills

With medical bills remaining the largest factor for Americans declaring bankruptcy, it’s clear that the nation’s largest epidemic is actually medical debt.

So, what can you do to keep them from ruining your finances? Is there a way to get your credit back on track once you’ve been saddled with immense medical debt?

It’s not always easy, but there are strategic actions you can take to decrease the effect medical bills have on your credit score. Read on to find out what they are.

How Medical Bills Affect Your Credit

The good news is that medical debt only has an impact on your credit if it gets sent to a collection agency and they report it to the major credit bureaus. The bad news is that there is no way to know how quickly your medical provider sends unpaid bills to collections.

However, recent rules have been implemented by the credit bureaus to help make the process more transparent to consumers once the debt is reported.

Changes in 2017

For example, Experian, Equifax, and TransUnion now wait until a medical bill has been delinquent for 180 days before adding it to a consumer’s credit report.

This is helpful because the health insurance process is slow and even if something is covered, even partially, reimbursements may take time to process.

As soon as you find out your debt is going to collections, it’s wise to figure out what the date of delinquency. Then you’ll know how much time you have to get the outstanding medical bill taken care of.

Once it’s on your credit report, it’s displayed as an unpaid collection, and it will stay there for seven years.

When you pay it off, the item is then shown as being paid, and still remains visible on your report for the remainder of the seven years. Your credit score takes a big hit at the beginning, but the collection counts less heavily as time goes by.

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Unpaid Medical Bills

Currently, all unpaid medical bills are equally weighted on the FICO 8 scoring model, but the newest version, FICO 9, does not count medical collections as heavily as other types of debt.

Unfortunately, it’s likely to take time for the majority of lenders to implement the new scoring model when analyzing loan applications. VantageScore 3.0 doesn’t count paid collections at all but isn’t used as widely as FICO.

Even if you don’t know of any medical debts on your credit reports, it’s smart to check your report every year just to make sure. You can get all three of your credit reports for free to ensure all your information is accurate.

Collection agencies are required to follow specific protocols for notifying you of delinquent debt, but they don’t always do that.

Plus, even if you’ve paid off a collection, there may have been an error in updating the status from unpaid. So check your report to make sure an obscure medical collection isn’t dragging down your credit without your knowledge.

How to Remove Medical Collections From Your Credit Report

Even if you try your best to avoid having your debt go to medical collections, it’s sometimes impossible to avoid.

The unfortunate truth is that nearly 20% of American have unpaid medical debt. So what can you do once it’s there? You have a couple different options for getting it removed from your credit reports.

If you can pay the medical bill, you might be able to convince the collection agency to remove the item completely from the credit bureaus. They are not obligated to do this, but it’s worth asking.

If you were never notified about the amount owed or were wrongfully charged, contact the original care provider and ask them to remove your account from collections and pay them directly. If that doesn’t work, file a complaint with the Consumer Financial Protection Bureau.

Disputing Medical Collections

The Fair Credit Reporting Act requires the credit bureaus to investigate all disputes. When disputing errors on your credit reports, whether they’re medical related or not, it’s important to document every step you take.

Make copies of everything: your bills, receipts, and letters to and from the health care provider or debt collector. If you reach an agreement on the phone, ask the other party to send confirmation in writing so that you have a record of the arrangement.

In the event your credit history indicates that a paid medical bill is still unpaid, you dispute the account with the credit bureaus directly.

Just remember that you have to repeat the process with each credit bureau that has the medical collection on your credit report. The credit bureau is required to follow up with you within 30 days of receiving your complaint, so mark your calendar to make sure they do.

When you’re dealing with large amounts of debt, try your best to avoid it going to collections and showing up on your credit report. Ask your health care provider for assistance in coming up with a payment plan that works for both of you.

Never be afraid to negotiate and make sure no one has made any errors along the way with your account. This holds true even if your medical debt does appear on your credit report. Check that the delinquency date and payment status are accurate because it’s all too easy for someone to have made a clerical error at some point.

Request payment records from your doctor’s office and/or review old credit card statements and canceled checks to make sure everything matches up correctly.

While it takes a good deal of time and persistence, your diligence can often result in medical debts staying far away from your credit report.

How to Prevent Medical Bills from Destroying Your Credit

Just as it is with our physical health, prevention is the best cure for our financial health. Once you’ve recovered from your medical issue, start figuring out what your bills are going to look like.

Get Ahead of Your Medical Debt

Find out what expenses will be covered by your health insurance and what you’ll be responsible for yourself. Do this as soon as you can. Then, you won’t be surprised by any bills that arrive in the mail with a looming payment deadline.

Prepare in advance as much as possible so you can start making payments. It’s an unfortunate reality you have to deal with even when you’ve already been through health issues.

Pay Your Bills Monthly

When you first receive a bill and can’t pay it off right away, contact the medical provider to find out if you can sign up for a monthly payment plan.

Payment plans with hospitals and doctors offices typically don’t charge interest, and they shouldn’t send the medical debt to a collection agency if you make regular payments.

You can also consider applying for a low interest personal loan in the event your provider doesn’t offer monthly payments. It’s never ideal to have to pay interest on top of the principal balance, but it could prevent you from having the collection account go into delinquency and showing up on your credit report.

Negotiate the Bill

You also have the option to negotiate with the medical facility. Most providers would rather receive partial payment than no payment at all, and it also saves them the hassle of sending the delinquent amount to a collection agency. Simply call the billing department and ask for a better rate.

It’s also helpful to confirm that you’re being billed the correct amount. Since insurance companies often negotiate lower rates, you should still be eligible for those rates when you’re picking up costs through a deductible — but those savings aren’t necessarily reflected in your bill.

Ask for Forgiveness

Another tactic is to ask for balance forgiveness altogether. Again, this can be done directly through your care provider and should be attempted before your debt goes to a collection agency.

Write a letter to the provider explaining your financial situation and how burdensome your monthly payments have become.

This is most effective if your insurance company charged the care as out-of-network because they will have already paid the provider for in-network services.

That means the provider has already received some payment for the work completed. This tactic isn’t a sure thing, but it’s definitely worth the try when your debt is weighing you down.

Make an Agreement with the Collection Agency

If a collection agency does contact you, offer to pay right away with the contingency that they don’t report it or that they remove it from your credit report. Hopefully, you can work out some sort of plan to pay the debt and get back on track, even if it takes a while.

You want to avoid having any medical collection accounts appear on your credit report at all costs. Not only are they difficult to remove once they are on there, just one medical item can drop your credit score by as much as 100 points.