Even with health insurance, you can still end up with medical bills from medical expenses that weren’t covered by insurance. If you don't pay medical bills when they are due, they can end up going into collections.
When this happens, they will show up on your credit report and lower your credit score.
Unpaid medical bills can affect your credit report, but that doesn’t happen right away. Learn what to do when you receive a medical bill and how to react if medical debt is lowering your credit score.
How Medical Bills Affect Your Credit Report
If you ignore a bill that you cannot pay, it will go 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.
The three major credit bureaus—Equifax, Experian, and TransUnion—now have to wait 180 days before adding medical bills to your credit report. This gives you time to talk to your provider and come up with a payment plan.
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 entry 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.
Some 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.
How to Keep Medical Bills Off Your Credit Report
The best way to prevent medical bills from impacting your credit report and bringing down your credit score is to prevent them from going into collections.
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.
When you receive a medical bill, you have a few options for how to handle it.
- Pay the debt if you can: If you are able to pay the bill, the best thing to do is make your payment as quickly as possible. Otherwise, you risk forgetting about the bill, which can result in late fees or calls from collections agencies.
- Call the hospital billing department: If you cannot pay the entire bill, call the hospital's billing department. They may allow you to negotiate for a lower rate or set up a payment schedule.
- Use a credit card: You can use a medical credit card to pay your bills. Medical credit cards are used specifically to cover medical services, sometimes with no interest. You also can use a low-interest card or a new one with a 0% interest introductory offer, which will allow you to pay off your credit card bill monthly without owing as much in interest.
- Ask your provider about medical debt relief: Some hospital systems offer relief for patients undergoing financial hardship. You can ask your provider if you qualify for any of these options.
- Apply for Medicaid: If you qualify for Medicaid and need help paying recent medical bills, fill out an application. Once you are approved, the program will often pay three months of retroactive medical bills if you would have been eligible during that period.
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 credit report will suffer.
When You Receive a Medical Bill in Error
You can occasionally wind up with a medical bill that you aren't responsible for because of:
- A medical coding error: If the services aren’t coded properly, your insurance company may not pay for them, even if they were supposed to be covered.
- Duplicate quantities: If a service is accidentally entered into your bill twice, your insurance may only cover the first instance, leaving you on the hook for a second procedure or appointment that you never received.
- Incorrect personal information: If your account number or contact information is listed incorrectly, you may receive someone else's bills by accident.
- Incorrect insurance information: If your medical provider doesn't have the correct insurance information for you, they may send bills to the wrong company, who will refuse coverage.
If you receive a bill that’s not correct or you believe your insurance company should have covered it, you can take immediate steps to have the bill corrected.
Contact the hospital or provider as soon as you can after receiving the bill. If you can point out errors or correct out of date information, they may be able to resolve the issue within a few days and cancel the incorrect bill.
If your provider can't help, contact your insurance company directly. They may be able to contact the hospital on your behalf to resolve any errors or give you the information you need to provide the hospital to have them fixed.
If you are ultimately responsible for payment, you will need to take some kind of payment action. 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.
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 difficult, but there are steps you can take to repair your credit.
Validate the debt
Collections agents are required to validate the debt if you ask. You have 30 days to send a written and certified request to the collections agency asking that they provide you with:
- The name of the original creditor
- Proof that they have been assigned the debt by the original creditor
- The identity and value of the debt they are collecting
The agent must stop all requests for payment until they have provided this information or they are in violation of the Fair Debt Collection Practices Act.
Talk to your insurance company
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 your provider
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.
Contact credit bureaus
If there is an error on your credit report, either because someone else has taken responsibility for the bill or it was never your bill, you can contact the credit bureaus to dispute the error.
If you make a request to have an incorrect entry removed from your credit report, the credit reporting bureau must investigate your request, usually within 30 days, and inform you of the results of that investigation.
If credit bureaus do correct an error on your credit report, you can ask them to send a notice with the correction to anyone who:
- Has received your credit report in the last six months
- Used your credit report for employment purposes in the last two years
If you are unable to successfully dispute the error, 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 card 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.