Medical Bills On Credit Reports

Medical bills on credit reports are a huge problem for millions of Americans. Federal Reserve researchers found that over half of collection agency accounts and nearly one-fifth of lawsuits that show up as negative items on credit reports are for medical debts!

Are you one of those individuals with medical collections on your credit? Perhaps you were not able to pay a medical bill because you were uninsured, underinsured or because you had fallen on tough times. Or, maybe your debt was sent to collection while you were trying to get answers to things that confused you about a medical provider’s bill before you paid it. Or maybe you never even knew you owed the medical provider until a collection agency contacted you!

Whatever the reason, the collection account is probably showing up in your credit reports, where the federal Fair Credit Reporting Act says it can remain for 7 and a half years, even if you’ve since paid or settled the debt. Your credit scores may have taken a dive because of that negative information and you may have found it more difficult, if not impossible, to finance the purchase of a home, new vehicle, or some other big-ticket item.

A Common Myth About Medical Bills on Credit Reports

Some facts about medical debts on credit reports:

  • Contrary to popular belief, you may not always be able to keep a medical bill out of collections just by making small payments.
  • Consumers have reported to us that their medical debts have been turned over to collections when they were just one day late with a payment on a payment arrangement. 
  • Neither the Fair Debt Collection Practices Act or the Fair Credit Reporting Act require a medical provider to notify you first before turning a delinquent account over to collections.
  • Collection agencies are not required to give you an opportunity to dispute or pay a medical collection account before reporting it to credit reporting agencies. You do have the right to dispute mistakes on your credit report, but if the collection agency says the item is correct it will likely continue to be reported.
  • Credit reporting agencies will not report medical collections that are less than 180 days old (from the date of service). This should give you time to try to work out a payment plan or deal with your insurance company.
  • If your insurance pays a medical bill that is in collections, you can get that collection account removed from your credit reports.
  • Any collection item with an original balance of $100 or less will be ignored when FICO credit scores are calculated.
  • With older credit scoring systems, some of which are still used today by lenders, medical collections are not treated more leniently. In these scoring systems, all
    collection accounts are extremely negative, regardless of the type of debt.
  • Newer credit scoring models ignore collection accounts where the balance is paid, and treat medical collections more leniently.


Learn More About How to Handle Medical Bills You Can't Pay

Learn how debt collection laws can help you!
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