If you have overwhelming medical bills, your credit scores may be the least of your concerns. One more collection account is unlikely to have much impact once your scores are battered by multiple late payments, charge-offs and other collection accounts. The information in my columns "How to haggle over medical bills," "How not to pay your bills" and "Bounce back from bad credit" may be more relevant to your situation.
If you're trying to protect your scores from the impact of a rogue medical bill, however, here's what you need to do:
- Monitor every medical bill. Don't assume your insurer will automatically pay, even if it pre-authorized a treatment or procedure. Medical providers are often quicker to turn over an unpaid bill to collections than lenders or other creditors might be, so you want to pay close attention to the status of every bill. Once 30 days have passed, you should be on the phone to both the provider and your insurer to see what's happening. Start the appeals process with your insurer if necessary.
- Don't pay without thinking. If an account is turned over to collections, or if you discover a collection on your credit reports, your first instinct might be to pay it to get rid of it. That typically won't work. Your leverage to get the collection deleted from your credit reports often disappears once you pay the bill, so try other methods first.
- Dispute the collections with the bureaus. If the collection is large or recent, this probably won't work. But collection agencies may not bother to verify a smaller, older collection account, so disputing the collection as "not mine" may succeed in removing the account from your credit files.
- Ask your provider to take back the account. Many creditors sell their delinquent accounts to collection agencies, leaving you no choice but to deal with the collector if you want to pay the debt. Medical providers, on the other hand, often place their delinquent accounts with collection agencies on a commission basis, said Nicholas Newsad, the author of "The Medical Bill Survival Guide: Easy, Effective Strategies for People Experiencing Financial Hardship." If you can pay the bill, try asking the medical provider to take back the account from collections and remove it from your credit reports.
- Consider "pay for deletion." You'll have the most leverage if you have a lump sum and you can pay the entire bill, or at least most of it (if the amount owed is large). If that's the case, tell the collector you want the collection account removed from your credit reports as part of the deal. Don't pay until you get the collector's promise, in advance and in writing. Follow up in a month by pulling your credit reports to make sure the collections have been deleted.
- Remember that time heals most credit wounds. If a medical collection remains on your reports despite your best efforts, don't despair. Over time, the impact of a negative mark fades, particularly if the rest of your credit reports shows you use credit responsibly.
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
