Medical Bill Sent to Collections - How it Affects Your Credit Score

Reader Question: I have a dispute regarding a medical bill and it just went to collections. How will this affect my credit score?

I found some previous Q&A sessions that will help you understand the relationship between unpaid medical bills and credit scores. So instead of answering this question from scratch, I thought it would benefit you more to have a list of the previous questions on this subject.

Overdue Medical Bills and Credit Scores
This person asked a question very similar to yours. How does this situation affect your credit scores? This article outlines the billing process that takes place in most medical offices. So if your account has already been sent to collections you might know all this already. Still, it's worth a read.

How to Dispute Medical Bills on Credit Report
This person obtained her credit reports and found that there were some unpaid medical bills that were sent to collection in the past, and she wanted to know how she could dispute the item. She didn't provide much detail about the situation, but I can assume she wanted to dispute the item because either (A) it had been on her report longer than the allotted time or (B) it was an erroneous entry to begin with.

Removing Unpaid Medical Bills Before 7 Years
Most negative items will stay on your credit report for a period of up to seven years. This is the maximum length of time. By federal law, negative entries must be removed after seven years. This person had some medical bills sent to collection and wanted to know if there was a way to remove them from the credit report before the seven years was up.

You mentioned in your question that you're trying to dispute the account. So it seems you already know the two primary options you have once a medical bill goes to a collection agency. You can dispute it, if you feel there is a billing mistake being made. Or you can pay the bill through the collection company.

Once the account is reported to the credit bureaus (probably by the collection agency), it will appear as a negative item on your credit report and will thus hurt your score. But here's what you should take away from all this: A negative entry that was eventually paid off will have less of an impact on your credit score than a negative item that was never paid off. In other words, by paying off a past debt -- even after it has been sent to collection -- you can reduce the impact it has on your credit score.

And if you do end up paying the bill, it's best to pay it off completely rather than making a settlement for a lesser amount. You'll be helping your score by paying the medical bills off entirely, even if you have to make a series of payments in order to do that.

I hope that helps you out some. Good luck.