I read a story recently about a young woman who ended up owing more than $6000 in medical bills. It was for a test that her insurance company had said it would pay for but then reneged on. The bill went into default and here’s the second biggest problem with medical bills – it will stay on her credit report for seven years.
It gets worse
It even got worse in this young woman’s case because the hospital turned her bill over to a debt collection agency that immediately reported it to the three credit bureaus. This caused her credit card interest rate to jump by 18 points.
The Fair Credit Reporting Act
Congress did pass the Fair Credit Reporting Act some years ago and there have been several attempts to amend it so that medical bills that have been paid would be deleted from credit reports. Unfortunately, this amendment has never passed. As a result, there is a huge number of Americans – probably around 40% – who have medical bills on their credit reports that have been sent to collectors. Some of these bills have been for less than a few hundred dollars.
Here’s the problem
Medical debt is different from traditional debts such as mortgages, insurance, car loans or even credit cards because they often involve a third party, namely a health insurance company. They are also different in that they rarely come with a statement each month that has a payment due date and amount. Many times patients will have no idea when a medical bill will arrive or even what it’s for. They may end up disputing the bill – either with the service provider or with their insurance company – or it may even be a false bill.
The problem is that false bills or even bills that have been paid will stay in your credit report for seven years – just as what happened to the young woman described above.
When medical bills are paid on time
Doctors, hospitals and other healthcare providers rarely furnish information to the three credit reporting agencies – Equifax, Experian and TransUnion. The downside of this is that when you do pay a medical bill on time, you really don’t get any credit for it. Instead, you will be affected only by medical bills that have been turned over to debt collectors who almost always report this to the credit reporting services.
The harmful effects of bad credit
When you have medical debts that are turned over to collectors and end up on your credit report, it can have a very adverse effect on your credit score. And when it comes to credit, your credit score is king. It’s the first thing that any potential lender will look at before granting you any type of credit. It can keep you from getting credit or cause you to pay higher interest rates for auto loans, a mortgage or even your auto insurance.
A bad or good credit score
Your credit score is a 3-digit representation of your credit record. It ranges from a low of 300 (bad) to a high of 850 (good). As you might guess, the higher your credit score the better. In fact, it is said that to get the best possible interest rates on loans or credit cards, you need a credit score of 820 or better. About 60% of us have credit scores between 650 and 799 and the median credit score is 723.
It’s like a ghost that just keeps haunting you
If you’re having a serious problem with debt it’s like a ghost that just won’t go away. You have to find some way to eliminate it. You have several options such as a debt consolidation loan or a debt management program. However, we believe that debt settlement is a better solution and if you give us the opportunity, we can prove it. Plus, we offer a 100% satisfaction guarantee. If you are ever unhappy with any of the debt relief programs we offer you, just cancel and there will be no penalties and no fees. Call our toll-free number today for immediate help.