Search

Trending Searches chaseAmex sapphire citicapital oneDeltaInk unlimited unitedcredit

Generic filters
Filter







Trending Searches E-WalletSmart card0% APRChase BusinessGas

Select Page
FREE PDF GUIDE

FROM DREAM TO HOME

FREE PDF GUIDE

HOW TO TACKLE CREDIT CARD DEBT

The Sad Truth About Medical Collections

- Aug 15, 2021 credit0 comments

The other day, while I was praying, a beggar passed by asking for Tzedakah. I threw in a dollar. The beggar was excited and gave me the following blessing; “May you never have any doctor bills or hospital bills”. I thanked him but did not put much thought to what he had said. 

However, standing next to me was an old fellow. He looked up and said to me, “Oh! What a beautiful blessing that was! It really would be great to live life without any doctor bills”.

I shall now bless my readers with the very same blessing.

In this post, we will discuss what you need to know if you unfortunately do get hit with a doctor bill and it goes for collection.

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. That in turn, will affect your credit score.

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

Medical collections - 180 Day Grace Period

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

Many people confuse the grace period with thinking that the medical collection cannot be reported at all on your credit report. That is wrong. Medical collections can definitely show up on your credit report after they are more than 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. 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..

Not all collection companies report collections

Not every collection company will report an unpaid collection on your credit report. You can double check with the collection agency by asking them if they are a reporting collection agency or a non reporting collection agency.

Conclusion

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 either have your insurance pay the bill or at least 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.

 

Thanks for being with us!

Was this article helpful?

Sam Sam has nearly a decade's worth of experience educating his many readers on everything credit. Sam spends his days checking out credit cards for a full report, from the minute benefit details to the shebang of welcome bonuses. Plus studying the ins and outs of building proper credit. It’s his favorite pastime and he loves sharing it with others.

Leave A Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments

Recent Posts

Follow us

Click here to subscribe to
our WhatsApp channel

Todays
best offers

Chase Sapphire Preferred

Wow! Earn 100,000 points after spending $4,000 within the first 3 months.

more info

Citi Premier Card

Earn 80,000 points after spending $4,000 within the first 3 months.

more info

United Business Card

Earn 75,000 points after spending $5,000 within the first 3 months.

more info

Amex Platinum

Earn 100,000 points after spending $6,000 within the first 6 months. Plus earn 10 points at restaurants worldwide and when you Shop Small in the U.S. on up to $25,000 in combined purchases within the first 6 months (terms apply).

more info

You May Also Like

The 5 Most Important Factors In A FICO Score

The 5 Most Important Factors In A FICO Score

Every self-proclaimed guru on Google has “5 reasons why blah blah blah”.  But now I’m about to give you 5 REAL factors that FICO looks at when calculating your credit score.  Being that, as per FICO, as much as 90% of lending decisions are made using the FICO scoring...

read more
Rapid Rescore: How It Works And Everything You Need To Know

Rapid Rescore: How It Works And Everything You Need To Know

When applying for a mortgage, it is very important for you to have your credit file up-to-date. That’s why most mortgage brokers and lenders offer a service called a rapid rescore. For example, if you’ve had high balances on your credit cards and already paid them up,...

read more
ExtraCredit By Credit.com – Full Review

ExtraCredit By Credit.com – Full Review

Their tagline is “Credit is complicated. ExtraCredit is not”. So true. I’m sure you’re ready to hear what ExtraCredit is all about! ExtraCredit is an online software slash website that gives you access to monitor your credit score and credit...

read more
Will Opening A New Credit Card Affect My Credit Score?

Will Opening A New Credit Card Affect My Credit Score?

Some questions don’t have a straight answer. This question is one of them.  There is no one size fits all answer to this question of what effect opening a new credit card will have on your credit score. But here in this post, I will go through the different...

read more
Credit Utilization – 11 Things You Must Know

Credit Utilization – 11 Things You Must Know

One of the biggest factors credit models look at when calculating a credit score, is credit utilization. Credit utilization is how much of your credit line you utilize.  Let’s imagine your dad gives you $100 per month for allowance.  If he comes back 10 months...

read more
Chase Credit Journey – Is It Accurate? Complete Review

Chase Credit Journey – Is It Accurate? Complete Review

In 2017 Chase released a free, credit monitoring service called Chase Credit Journey. A credit monitoring service is a platform that allows you to review and keep tabs on your credit report and score. Why would you want to keep tabs on your credit report and score,...

read more

Download link sent
succesfully

Got it *please check your promotional inbox

Error sending download link

Try Again