Regardless of if you agree with America’s for-profit healthcare system, the cost of healthcare in the United States has skyrocketed in recent decades. This has left many who visit the ER for a simple procedure saddled with potentially thousands of dollars in medical debt.
The process typically starts at the billing desk at the hospital when you check out and are asked for full or partial payment. For many people, they believe this is the end of the medical billing process, when in reality it is only the beginning. Months later, additional bills may arrive that were not calculated at the time you left the hospital.
If you’re unable to pay these astronomical sums, the hospital may send your bill to a collections agency, which will promptly report it to the credit bureaus so it can be listed on your credit report. If you believe you’re being charged for a medical debt that isn’t yours, you can always contact the best credit repair company in Houston, but how badly do these bills affect your credit?
Medical Debt in Texas and Nationally
Once a medical bill has gone to collections, it will appear on your credit report. While this will affect your credit and credit score, recent efforts have been made to minimize this effect.
The debt will have a label that identifies it as a medical debt. As of July 1st, 2022, companies have to wait one year before reporting your medical debt to credit bureaus. They also have to drop any medical collections accounts from your credit report once they have been paid in full.
Furthermore, the credit reporting bureaus have made an effort to lower the impact that medical debt has on credit reports and scores. Credit bureaus have a proprietary equation that they use to determine credit scores. This equation takes into account details such as: how much money you owe, how many accounts you have open, debts that have gone to collections, and hard credit inquiries.
Previously, if collection accounts made up 25% of your credit score and medical collections was 5% of that, that 5% would be classified separately. Once again, this is only an example, as no one knows the formulas used by the credit bureaus. These efforts have given some consumers relief from medical debt dragging down what is otherwise a stellar credit report.
Less Impactful but Not Forgotten
Sadly, while efforts are being made to lessen the impact of medical bills on a person’s credit report, this does not mean that the medical debt is forgiven. Companies may continue to pursue you, up to and including taking you to court. Medical debt remains a grave threat to the financial security of many Americans, and continues to be a major factor in a large percentage of bankruptcies in the United States.
Moving Forward
If you believe there is fraudulent information affecting you, such as judgments showing up on your credit reports or medical collections that don’t belong to you, legitimate and licensed credit repair companies like The Phenix Group can help. A credit repair company’s job is to work with the credit bureaus, collections agencies, and original creditors to prove debts aren’t yours so they can be removed from your credit report.
Even having a single negative item removed from your credit report can cause your score to skyrocket, especially if it was significant in size or was the only negative item. When you consider that a 1% lower interest rate from 7% to 6% on a thirty-year mortgage for a $300,000 loan will save you over $65,000 over the life of the loan, it’s easy to see that credit repair is a must.
If you want to learn more about your credit score, check out our post on how long hard credit inquiries stay on your credit report!