Medical bills cause a lot of problems. In fact, according to the Kaiser Family Foundation, nearly a quarter of all Americans are struggling to pay their medical bills — even when they have health insurance.
Eventually, your medical provider will send your unpaid balance to a collection agency which can cause even more trouble because your credit score will suffer.
The good news? You can remove medical debt from your credit report.
How Medical Collections Hurt Your Credit Score
First of all, it’s important to understand how medical collections affect your credit score.
Before 2014, FICO (the most common credit-scoring system) treated unpaid medical collections the same as any other debt.
Back then, medical debt hurt your credit score just as much as unpaid credit card bills.
Since 2014, FICO has changed its scoring system to lessen the impact of medical debt collections on your credit score. This is good news if you’re dealing with unpaid medical debt.
But it works both ways: Removing unpaid medical debt will improve your credit score less than removing other accounts such as credit card debt.
If you have multiple types of debt pulling down your score, I’d recommend attacking a different kind of debt first.
Still, getting medical debt off your credit history can help you get better interest rates and increase your borrowing power, especially if you’re applying for a mortgage soon.
Medical Debt Changes in 2017
In September of 2017, the three major credit bureaus announced more changes to the way they report medical debt.
Experian, Equifax, and TransUnion agreed to remove medical collections from credit reports when:
- The medical collections are less than 180 days old. This gives you time to resolve a past due balance before it starts hurting your credit.
- The medical collections are paid by a health insurance company. This is a change in the FICO 9 and VantageScore 3.0 models. Many lenders still use the FICO 8 model which lowers your credit even if the account has been paid off.
If you have a medical collection account that meets one or both of these criteria, the account should have been removed from your credit report already.
If you believe your collection does fit those criteria but it’s still on your credit report, you should dispute the entry with the credit bureaus and with the Consumer Financial Protection Bureau.
More Changes Coming to Medical Credit Reporting
The new FICO 9 and VantageScore 3.0 credit scoring models will have a different approach to reporting the medical debt.
You won’t be punished for medical debt that has been paid off — either by you or an insurance company.
Under the current FICO 8 model, medical debt hurts your credit score even after you’ve paid it off — unless you can negotiate with a collections agent to remove the negative impact in exchange for payment which we’ll discuss below.
This is part of a trend in medical credit reporting to lessen the credit impact of medical expenses since so many people deal with this problem.
How to Delete Medical Collections From Your Credit Report
To have medical collections deleted from your credit report, you should follow the same steps you’d use for any other kind of collections agency account.
Step 1. Validate the Debt
The Fair Debt Collection Practices Act gives you the right to ask a debt collector to verify the debt really is yours.
You can write the debt collector a debt validation letter asking for proof you owe the money. In your letter, ask the collections agency to remove the collection if they can’t prove you owe the money.
You’ll need to request validation within 30 days of your first contact with the collections agency to get the best results. If the debt collector can validate the debt, it’s time to move on to step 2.
Step 2. Dispute Inaccurate Information
If the debt is valid, get a copy of your free credit report and see if you can find any inaccurate information as it pertains to the medical collection.
Look for inaccurate information such as dates, balances, account numbers, names, etc. If you find anything that’s inaccurate, you should dispute the entry with the credit bureau — TransUnion, Equifax, or Experian.
The credit bureau will have 30 days to investigate your dispute. If they can’t verify the information is accurate or correct the data, it will likely be removed from your credit report.
You’ll have to stay on top of the credit bureaus. The Fair Credit Reporting Act requires them to answer your disputes, but working with large bureaus is seldom simple.
Step 3. Negotiate a Payment Plan
When your credit report shows valid and accurate data that’s having a negative impact on your credit score, you still have one more option: You can negotiate a payment in exchange for removing the negative item.
A collections agency often buys medical debt from your healthcare provider. If you owed your doctor’s office $2,000, the collections agency may have paid only $500 for your past due debt.
In this case, the debt collector may be willing to accept less than the full $2,000 you owed. You could offer to pay $800 for example — in exchange for closing the account and removing the negative items from your credit report.
When you use this strategy, always be sure to get the payment arrangements in writing before you send a payment. After you make your payment, check your credit report to make sure the agency kept its promise.
Some agencies may want a lump sum amount, but you could try to negotiate for monthly payments instead.
Or, Hire a Professional to Remove the Collection
Credit repair companies exist to help you remove inaccurate information from your credit report.
You’ll have to pay a monthly fee to get these professional services. But they can save you a ton of time and energy.
As you can see from this post, credit reporting for any type of collection is complex and time-consuming.
How Long Medical Collections Stay on Your Credit Report
Left unchallenged, medical debt will remain on your credit history for seven years — just like any other kind of debt.
You can shorten this time frame by taking steps to remove medical collections from your credit report.
Credit scoring models emphasize new debt over older accounts, so as your medical accounts age their impact on your credit score will have less weight. But any debt reported by a collections agency can harm your score.
Lenders may deny your applications for borrowing based on negative items that appear on your credit report. Removing negative items can help restore your credit.
How to Keep Medical Debt Off Your Credit Report
As your doctor may say about your health, an ounce of prevention is worth a pound of cure. The same is true for medical debt.
To keep your medical bills off your credit report, make sure you:
- Read Your Explanation of Benefits: If you expect your insurance company to pay a medical bill, your explanation of benefits will show how much of the bill you’re expected to pay. Reading EOBs prevents surprise past due balances.
- Communicate with Service Providers: The billing department at your hospital or doctor’s office may have grace periods or other ways to help keep your payment history on track. You may be able to negotiate a better payment plan to keep your account current.
- Communicate with Insurance Companies: You can avoid medical collections by communicating with your insurance company before a procedure to find out how much you’ll owe out of pocket.
- Stay In-Network: Finding service providers inside your insurance company’s network can help keep medical costs lower and lower the chances of past due balances landing in collections.
- Use Public Insurance When Possible: If you qualify for Medicare or Medicaid, these public insurance programs could help you pay off medical bills and avoid collections. Medicare is income-based and income requirements vary by state.
Patience Is Key to Removing Medical Bills
Despite new credit scoring models placing less weight on medical collections, past due medical bills can still hurt your credit score.
As you work to remove negative items from your credit report, know that working with credit bureaus takes time and patience. You won’t see results within days or weeks. More likely it’ll take a month or more to remove negative items.
The Covid-19 pandemic has created more confusion — and some built-in relief from medical debt as some debt collectors have grace periods in place.
But if you’re hitting a brick wall and you think a credit bureau or a debt collector has violated your consumer rights, report your experience to the Consumer Financial Protection Bureau. This federal agency oversees the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.
By learning your rights and keeping up with changes in the credit scoring models, you can lower the negative impact medical bills have on your credit life.