Medical debt can be an especially difficult and daunting problem to face, both financially and emotionally. Whether you’ve had a medical emergency occur or you simply don’t have the money to pay your medical bills, dealing with this type of debt can have a negative impact on your credit score. While it may seem like an insurmountable challenge, there are steps you can take to get back on track and manage your medical debt responsibly.
Here is what you need to know about how medical debt affects your credit score and the best ways to deal with it.
1. What Is Medical Debt?
Medical debt is any type of unpaid bill for health care services received from providers such as a hospital, doctor, or clinic. It is not the same as health insurance premiums or out-of-pocket costs for medicine. This type of debt is usually reported to credit bureaus by collection agencies that attempt to collect these debts from consumers.
If you need to know how to get rid of medical collections from your credit report, you will have to take action as soon as possible to prevent this from having a negative impact on your score.
2. How Medical Debt Impacts Your Credit Score
Medical debt has a negative impact on your credit score and can lower it significantly if not managed properly. Unpaid medical bills are sent to collection agencies after about 90 days and remain on your report for seven years, even if you pay them off.
Also, the date of first delinquency (DOD) associated with medical debt remains on your credit report for seven years from the date of last activity regardless of whether you have paid or not. This means that medical debt can affect your credit score for years, even after you have paid it off.
3. Strategies To Manage Medical Debt
When faced with medical debt, there are some strategies that you can use to manage it and keep it from taking a toll on your credit score. These include:
Negotiate Payment Plans With Your Provider
Many providers will be willing to work with patients who are experiencing financial difficulty and negotiate payment plans that make sense for both parties. It’s important to communicate directly with them so they understand the situation and may be more likely to work out an agreement.
Utilize Financial Assistance Programs
If you don’t have insurance or can’t afford to pay your medical bills, look into financial assistance programs available from hospitals or other organizations that offer discounts for those with limited incomes.
Seek Help With Debt Repayment
If you need help managing your debt and don’t qualify for any of the above options, consider seeking debt repayment assistance from a non-profit credit counseling agency. A reputable one can help you create a budget and negotiate payment plans with creditors.
Medical debt is no small matter and can have major consequences for individuals if not handled in the right way. It’s important to understand how medical debt affects your credit score so you can take steps to minimize any potential damage it might cause.
Negotiating payment plans with providers, utilizing available financial assistance programs, seeking help with debt repayment, and disputing inaccurate information on your credit report are all strategies that can help manage medical debt more effectively and prevent it from adversely affecting your credit score. By taking these proactive steps, you can ensure that medical debt does not have a long-term negative impact on your finances.