Editorial Policy

That late medical bill can ding your credit report

Erica Sandberg

April 8, 2014

QHi Erica,

I just found out that a doctor's office I visited while traveling has been trying to get hold of me for several years to deliver a bill. They had an old address, but their bills weren't returned to them. Obviously, I'm embarrassed, but I'm also concerned that it will affect my credit. At what point do Equifax and the like take notice of outstanding bills? And what should I do if they do take notice? Thanks. –Ellen

ADear Ellen,

There is nothing like a medical bill to make a person really sick. Not only can the charges be bizarrely expensive, but when the paperwork gets waylaid, the resulting collection process and credit damage can snowball.

Credit damage occurs quickly because healthcare providers aren't banks. They are hospitals, and doctors' and dentists' offices. Their job is to provide treatment, not loans. Therefore, if they don't get paid for their services in a timely fashion, they usually pass the account to a collection agency.Ask Erica

Here is a typical medical debt timeline:

  1. The provider sends you a bill. After you had your appointment, the office sent you a statement, outlining your portion of what is due. It can take a day, a month or even longer for the bill to arrive. You are expected to pay what you owe in about a month.
  2. The bill is sent to internal collections. If you don't settle up, the account will often be routed to the provider's collections department (assuming it has one), and you'll receive letters and sometimes calls from the provider, requesting payment. At this stage, the provider may arrange an installment plan or even reduce the cost. Providers rarely send information about delinquent accounts directly to credit reporting agencies, so you're likely safe from credit damage.
  3. The provider may sell the debt to a collection agency. If the debt is small enough, it's possible that the provider will write it off as a bad debt and move on. However, if it's substantial, the provider usually sells the debt to a collection agency. The account will show up on your credit reports in about 30 days. There it will remain, dragging your credit score down, until you pay it or it gets knocked off your file. Negative information stays for seven years from the date of last activity. In your case, that will be the date the collector reported to the bureaus, so it's already been on your reports for a couple of years.

To know if the bill is with a collector, get a copy of your credit report from annualcreditreport.com. If you see it, resolve the problem. Contact the collector, and pay what you owe. The agency will update your report in about 30 days. Though satisfying the debt won't remove evidence that it went into collections, a zero balance looks better than one outstanding and will immediately improve your credit rating.

Try not to worry about your doctor's opinion of you. His or her office has nothing more to do with this account, and the staff has almost certainly long since forgotten about it. Still, if you want to use this person again, explain what happened, then give your correct address for future use.

Feel better? You should. Almost everyone makes a financial mistake or two. And, thankfully, most of them can be healed.

Got a question for Erica? Send her an email.