Paid Medical Bill Sent to Collection Agency - Impact on Score?

Reader Question: If a medical bill that has been paid gets turned over to a collection agency anyway, how does it affect the credit score?

If the bill was paid then the hospital or doctor should not send it to a collection agency. But if they do it anyway, and it gets reported to the credit reporting agencies as an unpaid medical bill, then it would show up on your credit reports and have a negative impact on your score. You would then have to dispute the medical bill through the reporting agencies to have it removed from your reports.

This brings up one of my biggest gripes with the whole reporting system. There is no front-end validation on the part of the credit bureaus. They take what people report to them as gospel, without any form of verification. The only time they actually verify a negative item is on the back end, when it gets disputed by the consumer.

So is it possible to have a paid bill reported as unpaid? Yes. And could that item then show up on your credit report? Yes. Would it have a negative impact on your overall score? It sure would.

This is why it's so important to request copies of your free yearly credit report every year, so you can check them over for errors. I've seen studies that suggested the majority of credit reports have at least one error on them. That's pretty disturbing, and it only underscores the two points I've made here: (1) the system is broken, and (2) it's important to review your information for accuracy about once a year.

Related Q&A sessions:

• Medical Bill Sent to Collections - Credit Score Impact
• Where Does My Credit Score Come From?

Hope that helps.