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How medical debt affects credit score

Unpaid medical bills often get reported to credit rating agencies, and they can seriously affect credit scores. While the uninsured are impacted by these bills more than other groups, more than a quarter of insured individuals and families encounter surprise medical bills that end up going on their credit reports. According to Consumer Reports, there are some things people can do to protect their scores when they encounter a bill.

Federal law requires the three big credit rating agencies to wait 180 days before including an unpaid medical bill in a person's credit report. This provides some time for disputing unpaid claims or errors that may be on a bill. If an insurance company ends up paying for a bill, the credit agencies are required to remove it from the report. Following up with a healthcare provider to insist that they get the bill removed from the report may be necessary.

Organizations are available for people who've suffered from negative credit as a result of unpaid medical bills. They may help a client obtain a low interest loan with a flexible payment plan, or they can help lower bills and implement a plan directly with the healthcare provider or collection agency. Using credit cards to pay off medical bills is not advised as the resulting high interest debt can actually be worse for a credit score.

In some cases, it may be in a person's best interests to seek bankruptcy to deal with their medical debt. A lawyer may carefully examine their client's financial situation and help them decide whether bankruptcy is the right option. They may then assist them with all the necessary paperwork, negotiations with creditors and court appearances.

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