4/23/2012 6:08 PM ET|
How $5 ruined my credit score
Even a small bill can hammer your credit rating if it goes to collections. Fortunately, there are ways to protect yourself.
CardRatings.com asked readers to tell us how they helped or hurt their credit scores. This story from reader Melinda Graham of York, Pa., shows how a little bill can cost you big money.
"In the fall of 2008, I got a flu shot at my doctor's office. A few weeks later, I got billed $5 for my co-pay on a 'blood draw' on that date. I procrastinated a bit on calling in to ask my doctor's office to fix what was probably just a miscoded procedure. Eventually I called and went through the usual ordeal of explaining the situation to person after person before finding the one who said they could take care of it.
"In the fall of 2009, I got a notice from a collection agency that my doctor's office had turned over a $5 unpaid bill for collection. I racked my brain for another bill that might have fallen through the cracks and couldn't come up with anything but the co-pay. So, there I was, looking at this collection notice and remembering the time spent on the phone the first time around, and I decided $5 wasn't worth the hassle. I mailed a check to the collection agency.
"Fast-forward a few months, when my fiancé and I decided to really get into discussing our finances in preparation for merging them after we got married. I told him about AnnualCreditReport.com, and how I like to review my credit report every few months. I hadn't checked it in a while, so we thought we should get our reports and pay for credit scores, too. And then I nearly fell off my chair when I saw that because the $5 medical bill had been reported by the collection agency, my score had dropped from 785 to 689! I was shocked: $5 = 96 points?! Boy, did I ever regret my decision to avoid the minor hassle of a phone call to straighten out the billing error.
"Subsequently, I did contact the doctor's billing office and got it all straightened out. They also notified the collection agency of the billing error and had that entry removed from my credit report with the credit bureaus. Unfortunately, my score only went back up to 764.
"No more collection agencies for me!"
Here's what every consumer should do to protect or improve a credit score:
- Pay all bills on time, and keep your credit usage low. To improve your score, try to use only 1% to 10% of your available credit line.
- Check credit reports regularly. Federal law allows you to get a free report once a year from each of the credit-reporting agencies -- Equifax, Experian and TransUnion. Log on to AnnualCreditReport.com to order or download yours.
- Fix mistakes on your credit report. While lenders and credit card issuers report your activity to the credit bureaus, you are responsible for the accuracy of your credit report. Errors can be as simple as a wrong name or address or as complex as a line of credit that has been opened in your name, meaning you may be the victim of identity theft. Follow these six steps to fix errors on your credit reports.
- Pay for your credit scores. If you anticipate applying for a loan such as a mortgage, you should get your credit scores a few months in advance so you can work on raising them. The higher your scores, the lower your interest rate will be. You may also want to subscribe to a credit-monitoring service, which will give you access to your scores on a regular basis. Knowing how much your scores go up or down based on your financial behavior may help you improve your money-management skills. Also, keeping an eye on your credit report and scores means you can jump on a problem before it gets out of hand and destroys your credit.
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Of course, he called the hospital and paid it right away, but is this fair? Can not pay a bill you didn't know existed. The only communications was a hospital statement showing a $0 balance due. What laws protect us...sorry I missed that .
I am just sick to death of this Doctor BS , they charge whatever they want, you never know what the cost will be, and most have some sort of attitude, tired of their greed.
I saw a $570 item on a bill from a hospital it said "Mucus Recovery System"
It was a box of kleenex, Who do these people thing they are
Another reason why these credit reporting companies should be done away with...
Don't trust the info they put out, and can ruin many families lives...
Ok people.Under the us privacy act 1974 it is illegal for a third party to have your information with out writen approval on their letter head ,and statue of limitation also can come into play,if ya know how All three credit bureau are third partys so use the law to help your self and clear all credit.I found a book you can get that has all you need to help your self and and take care of collection people . And come on people the bank took a bail out not us.We should do credit check on them and see how they like it.were putting our money in their banks ,Not them putting money orkoan in our banks. go to, madduckenterprises dot web dot officelive dot com
Bottom line is all these collections agencies want is money owed and they don't care how they get it. You were lucky the collection agency did not harrase or threaten you like some have done with me for bill i did not incure.I had to file bankruptcy because of identy theft years ago
One year when I checked my report it had me living in military housing in a state I had never even visited. I have never been in the military and I have never lived in military housing in any state. I think they make up things as they go along.
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