How Not To Let Your Medical Debt Affect Your Credit Score

The trauma of injury or illness can be bad enough but the usually astronomical medical bills that follow can really jeopardize your financial well-being. If you are not in a position to settle them then the damage to your credit score can really be serious. Typically, the concerned hospitals and doctors to whom you owe money do not report the medical debt to the credit agencies directly. Usually, they hand over the default cases to a debt collection agency, which usually reports them to the credit agencies.

Waking Up To the Gravity of the Problem

The real problem stems from the fact that most customers do not appreciate how easy it is for medical debt to impact their credit scores. Most of them are under the impression that as long as they are paying off the bills as regularly as they can, it will not be referred to a collection agency. Also, many people think that if the amount is not substantial, it will not be referred to a collection agency, and the credit impact will also be minimal even if it is. Unfortunately, this is not true as even relatively small amounts also tend to get referred to collection agencies, and reported to credit agencies. The amount of the debt has no bearing on the impact of the credit, and even if you pay off the collection agency promptly, the negative impact on your credit will last for around seven years. Even a single collection account can lead to your credit score dropping by 50 to 100 points.

Medical Debt

Monitor Your Credit Score Regularly

It is crucial that you keep on monitoring your credit reports on an annual basis. It does not cost you anything as there are lots of sites where you can simply register and get your latest credit score. There are some sites that will even give you updates on a monthly basis. Shockingly, a survey revealed that around 10% of the people had no clue that they have a collection account till such time it was revealed in their credit reports. In case you have managed to accumulate a pile of medical debt, then you may require professional debt relief assistance. To know more about debt relief visit our site.

Proactive Steps in Maintaining Healthy Credit

You really need to be alert about your medical bills even if you have excellent medical insurance coverage. It is simply not a good policy to assume that every issue will be taken care of. The Explanation of Benefits should be carefully reviewed and you should make it a point to contact your service provider or the insurance company, in case something seems to be awry.

In the event you are contacted by a collection agency regarding an outstanding medical bill, see if you can pay it right away and request them not to report it to the credit agencies. If the issue is resolved quickly and without any fuss, some collection agencies will agree to honor your request.

If You Are Being Penalized Unfairly

In case you encounter a situation that you believe is not fair, such as being referred to a collection agency without even having received the bill, you can first try and contact the service provider and find out why this has happened. Also, investigate if by settling the bill directly with them they will pull the case back from the collection agency so that it does not get reported. If this is not working out you can always lodge a complaint with the Consumer Financial Protection Bureau. If a collection agency contacts you regarding a medical bill that you think is not outstanding, then as per the Fair Debt Collection Practices Act enacted by the federal government, you have the right to request the collection agency to validate the outstanding. The Fair Credit Reporting Act also empowers you to file a dispute with the credit agencies that have reported the collection account.