How to Avoid Medical Debt on Your Credit Score

Medical expenses pay a larger part in the debt game than we might realize. More than 42 million Americans have crippling medical debts on their credit history that they were able to pay on time. These medical debts then go on one’s credit report and they make it more difficult to borrow money or get good interest rates when you need them. Yet and still, more than half of all of the past due debts that pop up on credit reports is medically related.

It’s not too hard to see that the costs of medical care in this country are far from affordable. For most people, getting the healthcare you need can be the difference between life and death. No one should be forced into debt to maintain their good health. Regardless of how you feel about the issue personally, it’s very clear that Americans need help getting access to more affordable healthcare and they need it as soon as possible. A medical debt on your credit score could cause some big issues and that’s the last thing you want to happen.

If your medical debts have already been handed off to a credit bureau, there’s very little you can do to reverse the damages that have been done. But if you’re proactive, you can keep that medical debt on your credit score from making a bad situation even worse. Are you looking for ways to deal with the medical debt on your credit score? With some hard work, you can turn things around quite well.

How Does it Work?

In general, any negative action can diminish your credit score by as much as 100 points. It doesn’t matter if it’s a medical bill or a phone bill: it will all matter. The higher the credit score you have, the more likely you are to be hit harder by a negative action cropping up on your credit report. As time wears on, the effects of that damage will decrease but it will exist on your report for seven years. The federal law mandates that these negative actions are dismissed within this period of time and only if you have a bankruptcy will you have to wait ten years.

One of the high points for those with medical debt on your credit score is the fact that the latest FICO credit score model doesn’t include those debts that are less than $100: and a lot of the unpaid debts that make their way to the collection agencies are debts of this kind. The VantageScore model also has some forgiveness built into it. Those collection debts that have been settled are not factored into this credit score model. It also doesn’t factor in those medical debts that have been reported by healthcare providers, so only those medical debts reported by a credit bureau are taken into account. This can be somewhat forgiving when you’ve got medical debt on your credit score!

Mistakes are Made

You can be certain that mistakes will be made along the way. It happens all too often that the charges you get on your medical bills are different than the ones that show up on your credit history. It’s safe to say that at least 20 percent of the collection claims made by medical companies are flawed in some way. It can be anything from an overcharge to the addition of services that weren’t administered. Now there’s legislation on the books that makes it more difficult for a medical organization to tack on charges that are inaccurate. Those credit agencies that go about trying to collect on a debt have to wait 120 days if the borrower is trying to work things out with the medical organization they owe money to. If you want to keep that medical debt on your credit score from causing a problem, there are a few things you can do.

• Cut a deal with your creditor. You might owe your creditor $500, but that doesn’t mean that has to be the end of the discussion. Most times, if you just make it a point to ask you can get a “discounted rate” for the services you were tendered. Medical companies know they’re not likely to get any money back if their bills go over to collections, so they’re usually more than willing to work with you to get some kind of benefit out of the deal. Don’t be afraid to ask for a lower rate!
• Review those bills thoroughly. Too often people get charged for services that weren’t performed and rates that don’t match up with their insurance coverage. Save yourself some time down the line by making sure all of the charges you see on your medical bill are right. If there’s any services listed that you didn’t get, be sure to take it up with the medical organization directly.

Medical debt on your credit score doesn’t have to mean that life is all over!