Patients should not ignore medical bills, even if they are challenging them, or else their credit score could suffer. Medical debt accounts for nearly half of all reported collections, and almost one in six credit reports contain a medical debt collection, according to the Federal Reserve.
Credit damage due to a medical collections account can complicate efforts to line up new financing at favorable interest rates. Some consumer advocates have called for these types of collections to be completely excluded from credit reports. Any collections item can lower a FICO credit score by as much as 100 points, says myFICO.com spokesman Anthony Sprauve. Those with a higher credit score tend to suffer more damage from a negative item than those with a lower credit score. The latest version of the FICO credit score ignores all collection items in amounts under $100; and the newest VantageScore model does not count collections accounts that were paid, or medical debt reported by a medical provider -- only that reported by collection agencies.
California Rep. Gary Miller introduced legislation in May that would prohibit debt collectors from reporting a medical collections for 120 days if the consumer is still negotiating or disputing the bill or is applying for financial assistance. Consumers who received medical care should keep track of the services and items they receive. A claim could get forwarded to a debt collector anywhere between 90 to 120 days after the patient is billed. Bills should be paid before the claim reaches a credit report, after which the consumer can contact the insurer for reimbursement.