In today’s world, you will find that your credit score affects much of what you can do in life. If you have poor credit, you will have a hard time getting a loan, buying a car, or buying a house. It is essential that you take steps to keep your credit in good shape, but this is sometimes easier said than done. This is especially true when you have medical bills you need to pay. Insurance does not always cover the full cost of surgeries and other procedures, and it is quite easy to have a mountain of medical bills facing you before you know it.
Lowering Your Credit Score
If you have unpaid medical bills, they will affect your credit scores. Keep in mind that most of the time the hospitals and doctors not do the reporting. Instead, they turn it over to a collection agency. This agency will report the unpaid bills. Those unpaid bills can cause a substantial amount of damage to your credit. In fact, just a single account that has gone to collection has the potential to drop you credit score by more than 50 points. In some cases, it could be up to a hundred points.
Medical debt is the most prevalent type of debt that goes into collection, so you are not alone if you are facing this situation. Around half of all collections are because of medical bills. This means a substantial number of people in the country have had their credit negatively affected because of unpaid medical debt.
There is some controversy and debate over whether medical debts should be considered in someone’s FICO score. Many believe that since most medical procedures and care are for the health of a person, they should not be included. It is not like the people went out and bought items on credit and then decided not to pay for it. In the case of medical debt, the procedures, medicines, and the like are generally necessary. However, regardless of whether you feel it should be included in the credit score, it currently is a part of your credit.
While there are some who will discount medical bills when they are determining creditworthiness, this is not the case with most lenders. You need to do what you can to reduce the chance of ruining your credit because of medical bills. They can stay on your record for seven years, and it will take a long time to get your credit back to where it should be. If you continue to have more debts that enter collection, it will be almost impossible.
Know What Your Insurance Does and Does Not Pay
How well do you know your insurance plan? Do you know what types of care and procedures it covers fully? Does it provide partial coverage? Does it not cover the procedure at all? When you take the time to understand your insurance coverage, it will give you a better idea of how much money you will need to spend out of your own pocket for the procedures. This will also provide you with insight needed to determine if you can afford the procedure. Never forego a procedure that you need for your health, but make sure you find ways that you can try to reduce the amount that you need to pay. It is possible, and you can sometimes get discounts through negotiating with the billing department. Later, we will discuss some of the methods you could try using to lower the costs of your medical bills.
Watch Your Credit Report Closely
It is up to you to watch your credit report and to make sure that it is accurate. While most of the reports are accurate, that is certainly not always the case. There could be errors where you had paid a bill that was never properly recorded, and the account went to collections. It could also be for a bill that was separate from your other medical bills, and that you never even realized existed. Anything that looks out of place on the credit report, whether it is medical debt collections or any other collections, should be examined closely. You do not want to have your credit ruined because of a mistake.
How Can You Stop Medical Debt from Lowering Your Credit?
You need to be proactive when it comes to your medical bills and debt. This means trying to pay them off as soon as you can. If you have a payment plan set up, pay it monthly, and if you are ever going to be late with a payment, let them know. This can help to stop a bill from going to collections in many cases. By communicating with the provider, it is often possible to get assistance when it comes to resolving the bills.
In some cases, they can offer financial assistance to patients in need. They may also offer to extend payment plans, which can help those who have debts that need to be paid.
If the insurance was supposed to cover the procedure, and didn’t, then you will likely get a bill. Since it is often time sensitive, it is generally a good idea to pay the bill for the month and then get in touch with your insurance company to straighten out the matter and to get it reimbursed. If this happens, do not delay getting into contact with the insurer, and make sure you keep all your records.
What If the Bills Are Too High?
If you find that your medical bills are simply too much for you to handle, which is the case with many people, it does not mean that all hope is lost. You can take steps that could lower your medical bills, and that can help to keep it from ruining your credit. One of the things you will want to do, whether you have had the procedure or care already, is negotiate with the provider’s billing department. Learn the true cost of the healthcare procedures through sites such as Healthcare Blue Book to make sure you are getting a fair deal for your area.
Even if you are getting a good deal, it is still possible to negotiate for a better one. Explain your circumstances and ask about discounts. Ask about payment plans and other arrangements they might be able to make with you. Seek help from a professional patient advocate who can provide expert advice in explaining patient responsibility and negotiating fair market rates.
You should also look at your bills carefully to see if there might be errors. While issues with the billing do not happen often, they do happen. You want to know whether you are being charged more than once for a procedure, or if you are being charged for the wrong procedure, for example. Examine your bills closely, and question anything that seems out of place.
Avoid the temptation of putting the bills on your credit card. After all, you are trying to save your credit, not make your credit card bills higher. The interest on the card could make it more expensive in the end. The only time that a credit card should even be considered, and it should be a last resort, is to get money to pay off a bill that is about to go into collections. Even then, there is still quite a bit of danger when it comes to using credit cards because the only thing you are doing is shifting around the debt, not really taking care of it!
As you can see, there are things you can do when you are in debt and you want to avoid ruining your credit. It takes some work, but it certainly is possible.
You will find that medical debt can ruin your credit quite quickly if you let it. You have the options mentioned above, but taking care of medical bills on your own is complex and time consuming; especially when ill or focusing on recovery. No matter the reason, you should consider getting help from professionals who are experienced when it comes to negotiations and reducing the overall medical bill debt that you owe.
The professionals at Ducit Health have this experience, and we’ve provided these services for countless clients who were able to save thousands. We can do the same thing for you. Our negotiating skills have helped to reduce the amount our clients owe by an average of 59%. With this reduction, it makes it much easier for people to handle their bills, whether they have insurance or are paying out of pocket. It means you will have less worry when it comes to keeping your credit in good shape. Get in touch with us today to see what we can do to help.
Meta: What happens if you are unable to pay your medical bills? If you do not pay, the bills will eventually go to collections and ruin your credit. Read on to see what you can do.