Credit Sesame Daily

Browse Categories

How to Get Medical Debt off Your Credit Report

How to Remove Medical Collections From Credit Report

If you’re lucky enough to have health insurance and a perfect credit score, then you may not be worried about medical bills. But a single unpaid medical bill can slash your free credit score by 100 points, potentially costing thousands of dollars in higher interest rates.

Mark Rukavina, principal at Community Health Advisors and former executive director of the Access Project, points out that unlike general credit card debt or student loans, medical bills are “generally incurred after an illness or injury so it’s not something that can be easily planned for.” A routine surgical procedure can result in bills totaling thousands of dollars, while more intensive treatments can cost five or six figures.

Further complicating the issue is the fact that “sometimes it’s a little unclear how the cost of that care is going to be covered, whether insurance is covering the bill or if the patient is covering it,” says Rukavina, adding that roughly half of bills in collection are medical-related.

If you’re unsure about whether to pay that $89 bill or if insurance will cover it, talk to your provider. “Don’t ignore bills and don’t expect them to go away,” says Rukavina. “It’s far less likely it will be sent to collections if you’re communicating with the provider. The earlier, the better.” If you work out an extended payment plan with your provider, get it in writing and make payments on time, he adds.

Consumers who become sick or injured and can’t pay their medical bills may find themselves facing multiple layers of insult and injury. Bad becomes worse when collection agencies hound by phone and mail and delinquent accounts stage an evil takeover of the consumer’s credit report. In fact, most reported collection accounts – 52% – are medical. Fortunately, changes by the big three credit bureaus (Experian, Equifax and TransUnion) that went into effect this past spring make it easier for consumers to get medical debt and other types of inaccurate data off their credit reports.

The changes are part of a broad policy overhaul involving the credit reporting industry and are the result of a settlement between the state of New York and the three credit reporting bureaus. New York State Attorney Eric Schneiderman began an investigation into the three bureaus’ reporting policies in 2012 after several New York residents filed complaints stating that they were unable to correct errors on their credit reports. Although the lawsuit was filed on behalf of New York residents, the resulting settlement created new policies that affect consumers nationwide.

Medical Debt and Your Credit Report

As part of these changes, medical debt can no longer appear on your credit report until after 180 days. This delay provides additional time for payments from insurance companies to post to an account and allows a longer period of time for the consumer to correct discrepancies and catch up with unpaid bills. The extended period also gives consumers additional time to arrange payments on the remaining balance.

As a result of the policy changes, consumers should find the process to get paid debt taken off their credit reports. The error disputing process was also made more consumer-friendly.

Despite the process becoming easier, some aspects of credit reporting do remain the same. Accurate delinquent medical debt is usually removed from a credit report seven years after it became delinquent.

For consumers who discover errors or paid medical accounts on their credit reports, here are the steps to take to remove medical bills from credit report:

1.     Document the error

If you have paid off a medical debt but it is still reported as unpaid, make copies of receipts, cancelled checks or other documents that prove the account was paid off. If necessary, request a current account statement from the payee (the medical office or the collection agency).

2.     Contact the credit bureaus

First, contact the credit bureaus as soon as you become aware that there is an error, or when you discover that a paid-off medical account still shows as unpaid on your credit report. There are two ways to do this. You can simply fill out the dispute form on each bureau’s website to inform them that the account has been paid off. You can also file a dispute by sending a formal letter and copies of your supporting documentation through certified mail. Either way, the bureau is then required to investigate and has 30 days to correct the issue or respond to your dispute.

3.     Follow up

Once you have disputed the error and the bureau responds, or you pay off the medical debt, check your credit report again to ensure that the corrections have been made.


If everything that shows up on your credit report is correct but you still have lingering medical debt, take heart. Even though medical debt does impact your credit score, the Fair Isaac Corporation (FICO), the company that helps determine how credit scores are calculated, looks at medical debt differently than other types of debt. This means that even though the medical debt may appear on your credit report, it won’t affect your overall FICO score quite as much as it may have in the past.

Current and prior versions of the FICO credit scores treat collections the same way whether medical, non-medical, paid or unpaid. Collections are considered to be major derogatory items and can, but don’t always, cause lower credit scores. In FICO’s latest, and yet to be released, credit score generation called FICO Score 9, medical collections, including paid medical collections, will have a smaller impact than non-medical collections, according to Anthony Sprauve, FICO’s Senior Consumer Credit Specialist.

The newest version of the VantageScore credit score (Version 3.0) ignores any and all collections that have a zero balance. The VantageScore credit scores do consider all collection types that are unpaid. What this means is if you have a medical collection and you end up settling it, or paying it, then once it’s updated to show a zero balance the newest VantageScore will completely ignore it.

If your medical debt isn’t in delinquency yet, there are several options that will effectively eliminate what you owe while keeping your credit intact:


Your bill might give you an itemized breakdown of every accrued expense. But just because it says that you owe $275 for a lab report, say, that doesn’t mean you have to pay that amount. That’s because many healthcare facilities and providers are amenable to negotiating your bill and usually, all you have to do is ask if they’ll give you a better rate. Chances are, they will.

Review the charges

When you have health insurance, your insurer negotiates cheaper prices for its customers. If you have a high-deductible coverage (and thus, have to pay out-of-pocket until you reach your deductible), you mistakenly could be charged the higher, uninsured rate. Take the time and call your healthcare provider to verify you were charged the right amount. If not, a lower “amount due” awaits you.

Establish a payment plan

Health bills can easily reach into the four or five digits. If yours are more than you can handle to pay off in one fell swoop, inquire with the billing department to see if your hospital or doctor will accept smaller payments on a monthly basis until you eliminate the balance. If you agree on an installment schedule, be sure to pay in a timely fashion; otherwise, they might terminate the agreement if you have lapses in payment.

Make a lump sum payment

If you’ve been making consistent payments towards your debt, it’s possible that a doctor or facility will accept a one-time payment that’s smaller than your outstanding balance in lieu of continuing your monthly payments. To increase your chances of success, offer a fair, lump-sum amount and pay by check, so the facility avoids any credit card transaction fees.

« Previous Post How Late Payments Affect Your Credit Report and Late Payment Credit Score Impacts
Next Post » Mobile Payment Apps and Identity Theft: What You Need to Know

Leave a Reply