Credit Report Articles

Proposed Medical Bill Seeks to Reduce Credit Report Damage

Car accidents, illnesses and chronic disease take a heavy emotional toll on families. The rising cost of healthcare remains a hurdle for many Americans trying to build a strong financial foundation. Medical-related debt is the No. 1 cause of bankruptcy in the U.S., leaving thousands with battered credit scores and credit reports at no fault of their own.

A recent bill would prohibit credit bureaus from placing medical-related debt on a consumer's credit report if the hospital bills have been paid off. This means that under the Medical Debt Relief Act, medical debt placed in collections would have to be removed from a consumer's credit report once the consumer settles the bill - rather than remaining on the individual's file for up to seven years, according to medical website DOTmed News.

Medical debt can wreak havoc on a consumer's credit score, making it more difficult to obtain loans and good rates in the future. Talk to your doctor and your insurance provider if you are facing large medical bills you can't pay. Most hospitals will negotiate the bill, especially if you received services or treatments that could have been provided at a lower price.

Discuss repayment plans with your physician to find affordable alternatives. Some doctors will lower a portion of your bill if you agree to pay the reduced amount in full within a certain time period (usually 30 days). Some plans impose interest while others don't, so make sure you can meet the payment obligations to prevent the bill from going to collections and damaging your credit score.

Seek treatment at a nonprofit hospital. Most nonprofits have programs that pick up the majority of medical costs. Talk to a financial counselor or patient advocate at the hospital to explore charity programs and repayment plans.

Don't ignore a collections agency. If your bill has been sent to collections, the information is on your credit report. Ignoring their calls is one of the worst things you can do, and it will not help you improve your credit score. Instead, tell them you can't pay, and you are working on ways to settle your debt.