How Medical Bills Affect Your Credit Report

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Even with health insurance, you can still end up with medical bills from medical expenses that weren’t covered by insurance. You can occasionally wind up with a medical bill because of a medical coding error; if the services aren’t coded properly, your insurance company may not provide coverage, even though the services were technically supposed to be covered by medical insurance. Make sure your medical service providers have your correct billing address.

Unpaid medical bills can affect your credit report, but that doesn’t happen right away. Before a medical bill is placed on your credit report, the medical service provider will send a bill or invoice to you for payment. You’ll have some time to pay before further collection action is taken.

What to When You Receive a Medical Bill

If you receive a bill that’s not correct or you believe your insurance company should have covered the expense, you should start working on an appeal right away. Work with your insurance company and the medical service provider to find out the steps you need to take to have the medical bill corrected.

If you are ultimately are responsible for payment, you have options before the bill goes on your credit report. You may be able to work out a payment arrangement directly with the service provider. Paying in installments allows you to pay off bill at your convenience and avoid affecting your credit. Keep up with the payments. Otherwise, falling behind could land your bill in collections.

Another option is to use a credit card—including a medical credit card—to cover the bill. Medical credit cards are used specifically to cover medical services, sometimes with no interest. If you have another credit card with enough available credit, you can use it to cover the medical expenses.

Don't wait too long. After several months of not hearing from you, the doctor or hospital will hire a collection agency to collect on your debt. At that point, your payment options may be limited. A debt collector may not be as willing to work with you as your medical services provider.

How Medical Bills Affect Your Credit Report

Taking care of the medical bill is the best way to keep it from being added to your credit report—even if you can't pay it. Ignore the bill and it goes on your credit report. Medical bills usually aren’t placed on your credit report until they’ve been sent to a collection agency for further payment.

Here's some good news. The three major credit bureaus—Equifax, Experian, and TransUnion—now have to wait 180 days before adding medical bills to your credit report. If the medical bill is added to your credit report and your insurance provider later pays it, the credit bureau is required to remove it from your credit report. This may not always happen automatically. You can send proof of this payment to the credit bureau to have the paid medical bills removed from your credit report.

Once a medical bill is on your credit report, it will affect your credit. Your credit score can drop and the bill will stay on your credit report for seven years, unless your insurance provider pays off the bill. Even if you self-pay, the medical bill will remain on your credit report unless you negotiate a pay for delete or goodwill deletion with the collection agency or medical service provider. Fortunately, newer credit scoring models don’t penalize you as much for having unpaid medical bills on your credit report.

However, some businesses may still use older credit scoring models that still penalize for medical bills.

Medical Bills You Didn't Know About 

Sometimes medical bills can be sent to collections and wind up on your credit report without you knowing you ever owed a bill. Dealing with these can be trickier and there's no guarantee of success. Start by getting your insurance company involved. If the insurance company pays the bill, you'll have an easier time getting it removed from your credit report. If it's up to you to pay the bill, you have a tougher time clearing up your credit report.

Contact the provider to find out why you never received a bill from them. If they had the wrong address, for example, explain the situation and ask whether they'd be willing to take the bill back from collections so you can pay them directly. Follow up by disputing the collections account with the credit bureaus to have it removed from your credit report. There's a chance you may end up paying the bill and waiting for the credit reporting time limit to expire.

Having a medical bill on your credit report won't ruin your credit forever, especially if you keep up with your other credit and debt payments. If it's the only negative item on your credit report and it's paid, you can still have a good credit score and have your new credit and loan applications approved.