How to get rid of your medical debt without hurting your credit
No doubt about it, Americans are drowning in medical debt.
A recent study indicated that 137 million Americans were battling onerous medical debt – and that was right before the coronavirus pandemic spread to the United States Another more recent study by Freedom Debt Relief noted that the problem is only getting worse, as 75% of these people say they have accumulated more medical debt since March 2020.
If you have medical debt and want to make sure it doesn’t hurt your credit, Credible can help. To make sure you stay informed about your credit status, sign up with a credit monitoring service. Credible can help you get started.
How to best repay your medical debt
Tackling high medical debt isn’t easy, but it is doable. Financial experts believe that attention to detail and a disciplined research campaign works best. These strategies can work the best.
1. Examine EOBs
Some experts estimate that 80% of medical bills contain errors or inflated charges, said Sean Fox, president of Freedom Debt Relief in San Mateo, Calif. If you want to deal with medical bills, make sure you stay on top of what’s on them. “Go back and look at the relevant bill from your health care insurer, known as the Explanation of Benefits (EOB),” Fox said. “If you see a problem or have a question, call the billing department of the supplier (or insurance company) who can resolve the problem.”
2. Contact the suppliers
Be upfront about your situation. “If you are unable to work and earn money to pay your bills (due to your medical condition), contact the supplier billing offices and explain to them,” Fox added. “Find out about the options they can offer you.”
3. Negotiate payments
Call the billing offices of your suppliers and inquire about payment deferral or other plans. “They can be particularly open to working with patients now, during the pandemic,” Fox said. “If you were to visit an off-grid provider, or if you don’t have medical insurance, ask for a pay price in cash. In some situations, some providers may also charge reduced Medicare or Medicaid fees.”
4. Get a personal loan
Consider a consolidation loan that covers all of your current debt. “The biggest positive impact here is that you end up with one monthly payment rather than several,” said Matthew Alden, debt relief and bankruptcy attorney in Cleveland, Oh.
Explore your personal loan options byCredible visit Compare rates with multiple lenders – all in minutes.
Improve your credit health
Once you’re on the right track to paying off your medical debt, focus on repairing any damage to your credit health.
“One of the best ways to improve your credit score is to simply be consistent over time,” said Daniel Joseph, founder of CoupleWealth.com, a digital platform that helps couples achieve financial stability. . “Pay off your balance regularly, avoid late payments and regularly request line of credit increases. Credit scores are heavily influenced by time, so the longer you can have good habits, the better your score will be. “
However, there are several factors that affect your credit scores, and paying your bills and credit accounts on time is usually the most important factor. An unpaid medical bill can lead to serious problems.
Confused about where you fall on the credit score spectrum? Then you should start using a credit monitoring service to track changes in your credit score. Credible can set you up with free service today.
“Also keep a low credit utilization rate – that is, the amount of debt you have on revolving credit accounts (such as credit cards and lines of credit) relative to your credit limits, “said Laura Adams, host of the Money Girl podcast. . “In general, a utilization rate of 20% or less is better for maintaining good credit or improving your scores.
You can also visit Credible.com and use its personal loan calculator to find the best personal loan rates to help pay off medical debt.
Medical debt issues
1. Serious financial problems
According to Michael Broughton, co-founder of Get Perch, a credit building mobile app platform, people often have to go to great lengths financially to get out of medical debt. “Often times these financial difficulties have resulted in people having to dip into their 401 (k) accounts, personal savings or even file for bankruptcy,” Broughton said.
2. Decrease in credit score problems
If the medical debt is not settled in a timely manner, the medical provider or hospital can remit it to a collection agency who can then report it to the offices. “If this happens, medical debt can negatively impact your credit score,” Broughton added. “However, hospitals or medical providers rarely report debt directly to the credit bureaus.”
In the event that a medical debt goes to a collection agency, there is relatively good news.
“On the other hand, if brought to the collection agency, the three bureaus treat medical delinquencies less critically than other debts as they offer some relief to medical debt holders,” he said. Broughton said. Here is what they offer:
- 180 day grace period before showing the debt on your credit report.
- Remove Debt From Your Credit Report Once It’s Paid Or Resolved
Whether you currently have unpaid medical debt or just want to stay in control of your credit, Credible can help. From bad credit to fair credit to great credit, to improve your score, you first need to know what it is. To see where you stand, turn to a credit monitoring service. Credible’s partners can help you find your credit score, history, alert you to potential fraud, and more..