Medical Bill Collections FAQs

Receiving a medical bill or paying a medical bill a few days late does not affect your credit score. However, a medical bill can affect your credit score if, and only if, a medical collection agency gets involved. To avoid such an instance, we recommend handling your medical bills before they jeopardize your credit card by lowering your credit scoring. If you fail to pay your bill and it is rendered past due, your healthcare provider can sell your debt to a collection agency, which takes over the debt and begins contacting you for payment.

Each healthcare provider has its own practices. Providers usually wait 90 days before turning their medical debt over to collections; however, some providers will wait 60 days while others will wait 180 days. To protect clients’ credit reports from being unfairly impacted by medical bills and help systemize credit reporting, Equifax, TransUnion, and Experian (the three largest credit bureaus in the U.S.) have set a 180-day waiting period before medical debt reflects on your credit history. As such, you get a 6-month grace period during which you can pay the bill, contact your insurance company to pay your bill, rectify any errors on your bill, or come up with a payment plan. By making efforts to pay your medical debt within 180 days, you can ensure that your medical bill does not affect your credit score.

You can expect unpaid medical bills to remain on your credit report for seven years from the original delinquency date. Given that your payment history is the main determinant of your credit score, accounting for approximately 35 percent of your score, having a collection account such as an unpaid medical debt in your credit history can bring about adverse outcomes.

Compared to other bills sent to collections, medical collection accounts are treated differently. Here’s how:

• Medical debts are given less weight - The latest scoring models, such as VantageScore 4.0 and FICO 9, weigh medical collections less than other types of collections. Thus, medical collections do not affect credit scores as much. Nonetheless, not all creditors use the above scoring models; therefore, medical collections can still hurt credit scores and affect individuals’ ability to get credit.
• The three credit bureaus give patients a grace period - The three credit bureaus, Equifax, TransUnion, and Experian, wait six months before they list the medical debt on your credit reports. During these six months, you can develop a payment option and prevent your debt from affecting your credit scores.
• Once paid, medical debts are removed - Most collections stay on credit reports for seven years; however, once you or your insurance pays your medical debt, it is removed from your credit report.

Collection agencies often purchase medical debt in bundled portfolios, paying four cents for every $1 debt. Alternatively stated, a collection agency might pay $40 to buy a delinquent account with a balance owed of $1000.

You should pay your medical bills in collections because failure to do so can affect your credit score. Make payment arrangements with your medical provider and ensure that you have the agreement in writing. If you make, let’s say, an arrangement to pay off your debt in six months and your medical provider agrees to it, they should not keep you in collections as long as you make payments as agreed.

If a collections agency contacts you over your medical debt, you should:

• Ask your provider about costs - Never assume that you do not owe money to a healthcare facility. Instead, ask your provider to give you more details about costs and follow up with your provider and insurance company even if you do not get a bill. 
• Ask if you can make monthly payments on your medical bills - You may be in a position that allows you to make monthly payments; however, you need documented evidence that your collector or provider is okay with this. This way, if your collector or provider makes a negative report on your credit report, you can challenge it and prove that they agreed to your monthly payments.
• Ensure that your medical provider proves that you owe - Always ask your provider for proof that you owe. If you receive a statement from a provider or its billing entity, chances are it will not have a complete breakdown of all the charges. As such, request a detailed breakdown in writing and go over all the costs to ensure that they reflect all the services you received.
• Make payment arrangements as soon as possible - It would help if you started talking to your provider’s billing department as early as possible. Even though your provider’s billing department is unsure how much you owe, start questioning them about payment arrangements. Most medical providers have established processes to discount portions of your bill or create payment schedules if you start paying in advance.
• Compare medical bills to insurance EOBs - Your insurance EOB provides a detailed breakdown of all the charges. Typically, EOBs tell you how much your provider charged, how much your insurance disallowed, how much you owe, and how much your insurance paid. Ensure that what you are billed for is not more than what your insurance says you owe.