Medical Debt and its Effect on Your Credit Score

Medical debt could be emotionally more traumatic and distressing than any other kinds of debt because it does not ever accrue by choice. Medical debt is mostly a result of a sudden accident or an unforeseen illness. It could really add up fast and unexpectedly. You need to understand your medical debt, medical expenses and figure out ways of dealing with medical bills you simply cannot afford.

Medical debts could be really painful especially if they damage your credit profile. The damage could be really significant. Hospitals and doctors normally do not report the medical debt to any credit reporting agencies. They instead, hand over unpaid debt cases to a debt collector. The debt collection agency is then supposed to report them. Medical debt is known to damage remarkably consumer credit scores. Only one single collection account could push down the credit score by 50-100 points.

Medical Debt

Important Facts about Medical Debt

  • A medical bill could end up with collections even if you have been making regular payments on your medical bill. It is actually, a misconception that if you are paying something, they would not be sending your medical debt to any collection agency.
  • Sometimes medical bills are presented to the collections even before the patient gets his bill. At that stage, the damage may have already been done.
  • Collection accounts are normally damaging irrespective of them having any medical connection.
  • Making payments to the collection agency might not mean your credit would be fixed. In most cases, these accounts are known to be reported for as many as 7.5 years and seem to be very damaging whether paid or unpaid.
  • It is important to understand that the status of your medical debt is of more importance than the size of your debt. This implies that a small bill could also harm your credit profile if it ends up with the bill collector. If you wish to know more about debt relief visit our site.

Monitoring and Reviewing Your Credit Reports

It is of crucial importance to get into the habit of reviewing your credit profile annually and monitoring your credit scores regularly. According to a survey carried out by, about 10 percent of individuals, who reviewed annually their credit reports, were able to discover a collection account, which was not known to them.

Does Medical Debt Damage My Credit Scores?

You are supposed to be having different credit scores. The FICO 9, the latest version of FICO does not consider paid collection accounts and medical collection accounts does not carry much weight in that particular model. VantageScore 3 makes it a point to ignore all kinds of paid collection accounts.

However, you need to keep in mind that majority of the lenders are still stuck with the older or previous versions of credit reports that do not believe in giving medical collections somewhat special treatment. So you must go about assuming that if your credit report demonstrates a collection account, it would in all likelihood be seen negatively whenever you are applying for insurance, credit or employment.

Tips for Maintaining Healthier Credit

  • Before one of your medical bills turn up in collections, try your best to be really proactive regarding your bills. Even though you have a solid health insurance, it is best not to take it for granted that everything would be well taken care of. Be very careful and attentive while reviewing your Explanation of Benefits. Get in touch with your insurance company or the provider at once, if it is not managed properly.
  • If a collection agency gets in touch with you regarding a medical bill, request them not to report the bill if you make the payment right away.
  • There is often no point in getting your collection account updated and identified as paid as it is of no use in boosting your credit score if the lender does not possess a latest credit score version.
  • If a collection agency gets in touch with you regarding a medical bill that you do not owe, you must request the collection agency to consider validating the debt. The Federal Fair Debt Collection Practices Act empowers you with the right to ask for debt validation.

Author Bio: David Crane is a consultant at a finance conglomerate which specializes in asset management, borrowing and lending, and debt settlement services for SMEs. He enjoys blogging and keeps on requesting his followers to know more about debt relief visit our site.