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What Medical Debt Does to Your Credit Score

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    What Medical Debt Does to Your Credit Score

    Health care charges can have big consequences as medical bills can drag down your credit score. (Published Thursday, Sept. 27, 2018)

    Health care charges can have big consequences as medical bills can drag down your credit score.

    A 10-day hospital stay for a heart condition in 2016, left Bill Townsend with medical bills topping $130,000.

    The 59-year-old comic book store owner thought his insurance would cover most of it. But after months of trying to navigate the $76,000 gap between what his insurance would pay and what the hospital billed him, he was turned over to a collections agency. The first step to blowing up his credit.

    “Something I really don’t like is uncertainty. And it was living with it 24/7. The idea that I don’t know how this was going to end. Am I going to lose my business? Am I going to lose my house?” he said.

    “Medical debt can do major damage to your finances if you leave it unresolved,” said  Donna Rosato, Consumer Reports Money Editor.

    New rules are trying to help. The three big credit agencies, Equifax, Experian, and TransUnion, are now required to wait 180 days before putting an unpaid medical bill on your credit report. So, if you’re disputing a claim, let the hospital or doctor’s office know you need more time to sort things out.

    And if the insurance company ultimately pays a bill, it has to be taken off your credit report.

    “And if the bad debt doesn’t disappear, you’re gonna have to follow up with your health care provider to get proof of payment and you might have to insist that the debt is removed from your credit report,” Rosato explained.

    Bill Townsend ultimately hired a medical billing advocate to help him resolve his bill. It wasn’t cheap, but it saved his sanity.

    “It’s just like a great weight had been lifted off,” said Townsend.

    If you need help resolving medical billing problems, an organization called the Patient Advocate Foundation can be a good resource. Start at their website.

    Consumer Reports also cautions against plunking down potentially high-interest-rate credit cards to pay medical bills.

    Many health care providers offer installment plans to help you make payments with little or no interest.