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Medical Bills and Your Credit Score


We have a reader Lorraine, who asked this question:

Is it better to pay off dr bills that are in collections or credit accounts from
my credit report to get my score up?

Thanks so much,


Both types of accounts are important to pay off, and both types of accounts will affect your credit scores.

I am telling you this from personal experience – My medical bills were the primary cause of my bankruptcy, and they did ruin my credit.

How credit accounts get reported:

Each month, your credit cards report your limit, your current balance, and the amount of your last payment. If you get behind on your payments, then the late notices that show up will lower your credit score.

Medical bills work almost the same way:

Medical bills do not usually get reported to the credit bureaus until they have been sold to a collection company. This means that the hospitals themselves, and the Dr’s offices that you may owe money to, they do not normally report the debt to your credit report.

However, once you completely default with them – meaning that you do not make any sort of payment at all, they cut their loss and sell your debt to a collection agency. It is the collection agency that will normally begin reporting your debt to the three credit bureaus.

I want to make that distinction because, depending on where your bills stand, you may have several different options.

Option #1: Your medical bills have not been turned over to a collection agency. (This explanation is also for other readers who may be in a similar situation, or any accounts that you have which have not been sold into collections.

Call your doctor, call the hospital, speak to someone in the billing department. There are programs that exist to help people with low – mid incomes. You will most likely not be told about these programs unless you ask, but they can reduce your overall medical debt by as much as 50% if you qualify. Definitely start there. For the medical accounts that are already in collections, it may be too late to participate in these programs. If that’s the case, you are stuck with the debt the collection company says you owe.

Option #2: Your medical bills have been sent to a collection agency, and they are being reported to the credit bureaus each month. If you are not sure whether or not they are being reported, you can check your credit reports for free by visiting Annual Credit Report.com

At this point, your time and energy are your best friends. You need to call the collection agencies, and negotiate a payment plan. Do not be afraid to ask if they are willing to take a settlement (if you can afford to make a lump sum payment in order to settle.) That will help reduce your total debt as well.

If you cannot make a lump sum payment at this time, simply tell them what you can afford to pay, and set up a payment schedule. Running and hiding from the collections folk puts you into bankruptcy – or at least, it did me! Dealing quickly and efficiently with the problem will save you a TON of money, as well as help to protect your good credit rating.

If you cannot afford the payments that they want you to make, don’t be afraid to tell them what you can afford to pay them. If you can pay $20 every two weeks reliably, then tell them that. If you can make a bigger payment, tell them that too. But make some sort of regular, affordable payment to the medical collection companies each month.

Any accounts that you have left over at the Dr’s office or hospital, treat them the same way. Make very regular small payments until your debt is gone. Ask to have late fees or other fees removed every single time you call. All of these things prevent you from going deeper into debt, and help you get your debt paid down faster.

About Your Credit Cards:

It is equally important to continue making payments on your credit cards as it is to take care of your medical bills. Both accounts can lower your credit score. However, there is one small consideration.

Medical collection accounts will never help your credit score. Timely credit card payments, and low balances on your credit cards will raise your credit score.

If I understand your question, you feel there is not enough money to go around, and you are afraid you will not be able to pay on all of of your different accounts. I promise you, that if you will take the time and effort to call every single person you owe money to, medical or credit, that you can definitely work out a payment arrangement that keeps you afloat, and keeps all of these negatives off of your credit report.

Managing these accounts has a lot more to do with the time and effort you put in, that what you owe. There are always ways to reduce the balance, to negotiate for better terms, etc.

Specific Advice For Credit Card Collections:

If you have credit accounts that are in collections, give them a call, and ask the rep all of the following questions:

Now, one warning: your credit card company may want you to close your credit account in order to participate in a hardship program. If you close your credit account to get rid of your debt, it will lower your credit score. It’s not right, but that’s the way it is.

Once it’s all said and done:

Once you have everything on a regular payment schedule, stick to that schedule whatever you do. As long as you are making the agreed upon payments, nothing negative should be listed on your credit report.

Don’t forget to go back and challenge the negative items on your credit report once you are on a payment schedule. This will help to repair your credit rating if you can get anything at all removed. We have a step-by-step guide to removing the negatives off of your credit report here.

Thanks for your question!


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