How Serious Are Medical Bills on Credit?

Debt is Debt

• Medical debt can often be more damaging to your credit score than other debts. Why? If you default on your credit card payments, your credit card company may report you as 30, 60 or 90 days late on your payments. Although these negative reports are damaging, if you catch up on your bills before the account is closed and sent to collections, the reporting stops there. Medical debt is seldom reported until the account is sent to collections. A collections report is far more damaging than a late payment report, so your medical bills could harm your credit more than delinquent payments on other accounts.
  
  

Mitigating the Damages

• If you have an unpaid medical debt in collections on your credit report, Bankrate recommends a few options. You can pay off your debt in full, which won't remove the negative mark on your credit report but will lessen its impact once the account is reported as paid. You can ignore the debt and wait seven years for it to fall off your report. If the account was paid and was sent to collections in error, you can appeal to have it removed from your report if you can prove the mistake. You also can write a 100-word statement addressing the story behind the debt. This statement becomes part of your credit report, and while it won't improve your credit score, Bankrate states that some lenders do consider these statements and may be willing to overlook your medical bill if the rest of your report is strong and the circumstances behind your medical debt are persuasive.
  
  

Protect Your Report

• If you don't have insurance, avoid medical collection nightmares by working with the doctor or hospital on a payment plan. Also ask about charity programs for the uninsured that may reduce your debt. If you do have insurance, keep track of your medical bills and what the insurance company is paying. Your insurance company could fail to pay a portion of your bill and you may not find out until it appears on your credit report unless you trace your medical bills carefully.
  
  

Pricing Protections

• Protect your credit report by negotiating pricing for medical services up front. This is especially important if you are uninsured. Many doctors and hospitals are willing to give uninsured patients a reduced rate if they pay for services in full on the day of treatment. If you cannot do that, be sure to discuss the cost of treatment up front and get it in writing so no surprises show up on your report down the line.