Chana F. is a working mom, juggling work and taking care of her four children. Life for her was always busy, but one day her oldest daughter started complaining about severe foot pain and she always seemed to be tired. Chana, as a responsible mother, got in touch with her doctor right away. After her daughter’s blood work came back all normal, she was referred to a specialist to go to. From there, she was busy going for a second and then third opinion. In the end, it turned out that it was something minor. Thank g-d nothing too serious.

But at the time Chana was running around to doctors thinking the worst, she had no time or head to think about who accepts which insurance. Now, once the worst is over, she is starting to receive hefty bills, which she cannot afford to pay. The medical bills are slowly being sold to third party collection agencies.

What risk is Chana taking by not paying the bills? How should Chana proceed, if paying the full bill is not a possible option?

In this post, we will discuss everything Chana, or you, need to know about third party medical collections.

The Threat

Usually, the biggest threat the medical collectors will use in order to convince you to make payments is that they will report the medical collection on your credit report which will affect your credit score.

But is that true? Do medical collections get reported right away, and do they affect your credit score?

180 Day Grace Period

Sometimes a medical bill does not get paid due to the fact that the insurance did not kick in yet. In reality, though, it has nothing to do with the consumer. Therefore, in 2017 congress issued a law that medical collections cannot appear on your credit report until they are 180 days past due.

Special Medical Attention

The newest Fico score (Fico 09) and the newest Vantage score (Vantage 04) give medical collections special attention. A medical collection will not affect your credit score as much as a non-medical collection. Also, with the Fico 09 scoring model, a paid collection will never affect your credit score.

But the issue is that, unfortunately, most lenders at this date, do not use the newest scoring models. The DU requires mortgage lenders to use the Fico 04 scoring model. All credit card issuers, as far as I know, use the Fico 08 scoring model. With auto loans, I have seen Mazda/Chase use Fico 09, but most still use Fico 08.

Fico 08 and Fico 04 do not give any special treatment for medical collections. Therefore, a medical collection will affect your credit score just like any other collection.

Small Dollar Amount Collections

It’s important to note that any collection under $100 does not affect credit with the Fico 08 (most often used) scoring model. The Fico 04, which is used for mortgage loans, does factor in even small collection amounts into the scoring model.


So, to sum it up, based on the scoring models currently in use by most lenders, medical collections will affect your credit score just like any other collection mark. But you do have the 180 day grace period before it can get reported on your credit report. In this 180 day period make sure to negotiate a fair settlement with the collector. Often, the collector will be willing to settle for pennies to the dollar.

When dealing with any collection agency it is important for you to know your rights. Read more about your rights under the FDCPA and NYC collection laws, here.

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