Medical bills should not be ignored in any way. This is irrespective of whether you are disputing this with your health insurer or doctor. If you ignore your medical bills, you will have to deal with a bad credit later on. In the recent times, medical debt is one of the most common type of collection account in most credit reports. Medical collections will have a severe negative impact on your credit situation. Many consumer advocates have opined that medical bills do not always reflect the credit risk of a person. So, it will be better to completely exclude them from credit reports.
How will medical debts damage your credit?
Unpaid medical debts may lower your credit scores by as much as 100 points. Also, it should be noted here that if you have a higher credit score, then a negative item will hurt your credit more compared to people who have lower credit scores. However, with time, the impact on your credit score will get lowered but the negative item will remain on your credit report for 7 years. Recently, there has been a change in FICO scoring rules. If you owe less than $100 on any collection item, then it will be ignored by the credit bureaus. As far as VantageScore model is concerned, they ignore medical debts and other collection accounts which have been paid off. Moreover, it also ignores medical debts reported by a medical provider. They will only consider medical debts reported by collection agencies.
Is it fair to include medical debts on credit report?
Its an ongoing debate whether medical collections should be included in the credit report. Most consumer advocates opine that unpaid medical bills are not a reliable predictor of credit risk. Most credit evaluators ignore it while calculating credit risk as they feel that it is not a good indicator of loan repayment. You will go for a medical debt when your life or your kid's life is at stake!
How will medical billing mistakes impact your credit?
Medical bills are not the last thing. You will also have to deal with medical billing mistakes. Many people are overcharged or billed for things that they did not get. Sometimes they are charged for things that their insurer would have paid for but didn't pay. Such things also have a negative impact on the credit of the borrower.
How can you get rid of such a situation?
Once you receive medical care, you should make sure that you are vigilant in regards to your credit report. You should keep a track of services and items you received when you applied for medical care. When you are in doubt about a medical bill, you should pay it off before it goes to collections and then try to get a reimbursement from your insurer. You should always remember that it is difficult to remove an item from collections. So, you should try to avoid that situation.