Something little known to consumers about the medical industry is that while your credits core can be negatively effected by missed payments on medical debt, the opposite is not true. There is no reward or positive effect gained from paying your medical bills on time. When you pay your power, water, or other utility bills each month it shows up on your credit history. So why don’t medical bill payments show up?
Medical debt is often one of the fastest escalating debts for consumers. So many of us fall into the pit of never ending medical debt from making simple mistakes.
One of the things that has stopped up the flow of communication between provider and patient is the Health Insurance Portability and Accountability Act (HIPAA). This legislation puts forth strong protections in terms of patient confidentiality. The problem with this is that some of the restrictions are so strict that it stops credit repair agencies and other third parties from having communications with debt collectors. This often includes the hospitals or medical providers themselves. This leads to problems and leaves the consumer to fend for his or her own self against the debt collectors.
When it comes to medical documents, reading them can be very complicated. Patients often have a hard time deciphering whether or not a document is a simple insurance notice, or a bill that they need to pay. We all know how difficult it can be to get clarification of documentation from a hospital or even a small doctors office via the phone.
This has led to many examples with medical debt going unpaid past the required payment date. The ironic thing is that, in a ton of cases where past due medical payments were involved, a lot of the consumers have a history of great credit, no missed payments, and great financial responsibility. They simply did not realize they needed to pay a bill, or how much they were required to pay.
Collections on medical debt typically averages around $580. This is actually a lot smaller than other market averages but still results in massive credit score hits to consumers. You’re talking a 50-60 point hit on small debts like this. And the better your credit score originally is, the bigger the hit typically is.
The first thing you need to do if you find yourself in a situation where unknown debt has been sent to collections is to pay off the debt. The last thing you need is the amount to keep growing, and the longer it is unpaid the more of a hit your credit score will take over time. Once you’ve paid, you should contact the credit agencies, show them proof that you paid your debts, and request that the negative item be removed. They may or may not do this for you.
In the case where the agency does NOT remove the negative items, you may want to look into a debt repair agency or credit repair company to help you resolve the issues. Companies like this have built relationships with the credit bureaus and know the best ways to resolve issues with them.
Medical debt has been wiping out credit scores all over the nation for years now. It’s out of control. Over 40 million of us are behind on our medical bills and represents over 50% of the debt which is being reported on our credit scores.
The worst part about medical debt is is typically is a result of you being unhealthy. When you are not in the best health it can be hard to focus on bills, debt, and finances in general. This adds a whole new level of difficulty when it comes to understanding bills and other medical documents provided to you. A lot of the time debts are really just inaccurate discrepancies caused by hospitals and doctors offices that we’re not caught in time to fix.
This leads to an unfair conundrum for patients. This is why as of July of 2017 FICO has started a new method in calculating and weighing your credit scores when pertaining to medical debt. The weight has been reduced for medical billing. The issue remains that it still effects your credit, just not as much as before.
We can sit around and hope for the best down the road, or we can take control of our finances now. If you’re a victim of medical debt effecting your credit, consider looking into DIY credit repair or using a credit repair company. Repairing your credit is the first step you need to take after wiping out the debt you owe.