When it comes to credit reports, many people are concerned about medical collections and their impact on their credit score. Medical debt is a common issue, and it’s not unusual for medical bills to end up in collections. In this article, we’ll discuss the basics of medical collections and how they impact your credit report.
What are medical collections?
Medical collections occur when a medical provider or hospital is unable to collect payment for services provided. After a certain period of time, they may sell the debt to a collection agency, which will then attempt to collect the debt from you. Medical collections can impact your credit score and may show up on your credit report.
Do medical collections remain on the credit report?
The answer is yes; medical collections can remain on your credit report for up to seven years from the date of the first delinquency. This means that if you missed a payment on a medical bill in 2015, and it was sent to collections, it will remain on your credit report until 2022. It’s important to note that paying off a medical collection account does not remove it from your credit report. However, paying off the debt can positively impact your credit score and show lenders that you’re taking steps to manage your debt.
How do medical collections impact your credit score?
Medical collections can negatively impact your credit score, just like any other type of debt in collections. A single medical collection can drop your credit score by 50-100 points, depending on your credit history. This drop can make it more challenging to obtain credit in the future, as lenders may see you as a higher risk borrower.
Additionally, having medical collections on your credit report can make it more challenging to obtain certain types of credit, such as a mortgage or auto loan. Lenders may see medical collections as a sign of financial instability, which can make them less likely to approve your application.
What can you do if you have medical collections on your credit report?
If you have medical collections on your credit report, there are several steps you can take to address the issue:
- Check your credit report: The first step is to obtain a copy of your credit report from one of the three major credit bureaus (Equifax, Experian, and TransUnion). Review your report for any errors or inaccuracies related to medical collections. If you find any errors, dispute them with the credit bureau.
- Negotiate a payment plan: If you have medical collections on your credit report, try to negotiate a payment plan with the collection agency. A payment plan can help you pay off the debt over time and may prevent the debt from being sent to a collection agency.
- Pay off the debt: Paying off the debt in full can positively impact your credit score and show lenders that you’re taking steps to manage your debt. However, it’s important to note that paying off the debt does not remove it from your credit report.
- Seek professional advice: If you’re struggling with medical debt or collections, consider seeking advice from a financial advisor or credit counseling service. These professionals can help you develop a plan to manage your debt and improve your credit score.
In conclusion, medical collections can remain on your credit report for up to seven years and can negatively impact your credit score. If you have medical collections on your credit report, check your report for errors, negotiate a payment plan, pay off the debt, and seek professional advice if needed. Remember, taking steps to manage your debt and improve your credit score can help you obtain credit in the future and improve your financial stability.