Medical bills don’t have any bearing on your credit — unless you allow them to go unpaid. Unpaid medical bills can end up on your credit report with a collection status. Depending on the credit-scoring model used, medical collections can weigh heavily or not so heavily — but they still affect your credit.
Can Medical Bills Impact Your Credit Reports and Scores?
Medical debts that become past due can affect your credit reports and scores, but the consequences of not paying don’t appear as quickly on your credit report as they did a few years ago.
In 2015, the three major credit reporting agencies, Equifax, Experian and TransUnion, announced as part of the National Consumer Assistance Plan (NCAP) that unpaid medical debts are subject to a grace period of 180 days before they are reported. This plan was fully implemented in March 2018. The idea behind the decision is that the extra time can allow for any insurance payments to be processed and applied, which can sometimes take months.
Medical providers do not typically report medical debts to credit reporting agencies. Instead, they turn the unpaid bills over to a collection agency who reports the negative information to the credit reporting agencies.
After 180 days, medical debts that are unpaid can remain on your credit report for seven years, which can negatively affect your credit.
However, if the medical debts have been paid or are being paid by an insurance provider, they are required to be removed from your credit report, according to the NCAP.
If you have unpaid medical debts that are legitimately your responsibility — as opposed to your insurer’s — make every effort to pay them off. It’s better to have collection accounts shown as “paid” on your credit reports. Some credit scoring models will not penalize you for medical collections that are marked as paid.
How Do Credit Scoring Models Weigh Medical Collections?
The most popular credit-scoring models — VantageScore 3.0 and FICO 8 — treat medical collections differently. VantageScore 3.0 excludes paid medical collections when calculating credit scores, so they don’t impact your rating.
FICO 8, however, treats medical collection accounts, including those that are paid, like other collection accounts, and they do impact your credit rating. The only time medical collections are ignored by FICO 8 is if the medical collection account had an original balance of less than $100.
Can Inaccurate Medical Bills Be Disputed?
If you believe that the information listed on your credit report regarding unpaid medical debts is inaccurate, you can dispute the information. Here are the steps you can take.
1. Compare your medical bills to the information listed on your credit report
Cross-check the information listed on your credit report with the original medical bill to see if there are any discrepancies between the two. If there are, make note of them.
2. Ask for proof that the medical debt belongs to you
If a collection agency contacts you about a debt that you don’t believe is yours, you have the right to receive proof of the debt.
According to the Fair Debt Collection Practices Act, a debt collector must provide you with a written notice within 5 days of any initial contact. The notice must include the following information:
- Amount owed
- Name of creditor who you owe
- A statement that, unless you dispute the debt within 30 days of the notice, the debt will be considered valid by the debt collector.
- A statement that, if you notify the debt collector in writing within 30 days that the debt is disputed, the debt collector will obtain and mail verification of the debt to you.
- A statement that, upon your request within the 30-day period, the collection agency will provide you with the name and address of your original creditor if applicable.
3. File a dispute with the credit bureau
If you believe the medical debt is in error, you can file a dispute. Each credit bureau has its own procedures for filing. Evidence that you may need to provide includes a copy of the original medical bill, proof of payment and a statement detailing why you believe the debt is inaccurate.
Keep Medical Bills From Affecting Your Credit
Not everyone takes the time to read through each piece of mail they receive. Unfortunately, if that’s your habit, you run the risk of missing an important bill, such as a medical debt you owe. Here are some ways you can avoid having medical bills escape your notice.
1. Make medical bills a priority
Never assume that you won’t have a balance after you’ve seen a healthcare provider. You can monitor your incoming mail for bills and also follow up with a phone call within 30 days of your visit to find out if you owe anything.
2. Look over your explanation of benefits
Your insurance company may also send you an explanation of the benefits. The EOB is a statement that details what the insurance company paid toward the medical debt and the part you still owe to your medical provider.
3. Request a detailed bill
If your healthcare provider sends you a bill with the total amount due but does not include a breakdown of the charges, request a detailed or itemized bill. If you are able to review each charge, you can verify that the provider is charging you correctly and request that the bill be corrected if the charges are in error.
4. Compare your insurance statements and your health provider’s bills
Medical billing mistakes can happen, and it’s up to you to make sure that you’re not being charged in error. Review the insurance company’s explanation of benefits to locate the amount that you still owe. Compare that amount with the amount your healthcare provider’s billing statement shows that you owe.
If you find a discrepancy, call the insurance company to verify that you aren’t being billed for covered benefits.
5. Request a payment plan
If you are unable to pay the amount that you owe to your healthcare provider, you can request a payment plan to attempt to keep your medical bill from going to collections.
Keep in mind that your healthcare provider is under no obligation to provide you with a payment plan. If you don’t have an agreed payment plan in place, paying a little each month toward the balance might not keep the bill from being handed over to a collection agency and reported to the credit bureaus.
Monitoring Debts and Your Credit
Keeping an eye out for medical bills is a wise strategy so that you can pay off what you owe before it gets sent to collections. But if a bill gets lost in the mail or otherwise escapes your notice, it can be reported as bad debt at some point and appear on your credit report.
You can find out about these and other derogatory marks more quickly if you monitor your credit with a product like ScoreSense. It provides users with credit reports and scores from all three credit reporting agencies, as well as monitoring and alerts that can help keep you in the loop about changes that occur.
If you’re not already monitoring your credit, what’s stopping you? Let us know in the comments.