After a cancer diagnosis, patients focus on getting a clean bill of health. But paying the bills that come with treatment can present another challenge.
Not paying medical bills, or even paying bills late, can have negative consequences. It’s important for cancer patients and survivors to understand how medical bills can impact their credit scores.
Lenders and others use a credit score to determine whether to approve a person for a mortgage, credit card, apartment or financing for a car. The higher a credit score, the better the chance of getting approved for a loan. Your credit score can also impact the interest rate on a loan or credit card. Over time, a low credit score can cost you a lot of money, and negative information can remain on your credit report for seven years.
As a staff attorney at the Cancer Legal Resource Center, I respond to calls to our helpline about cancer-related legal issues. The following tips can help patients understand and improve their credit score.
Monitor your credit. A credit report is comprised of various types of financial information, including bill payment history, lines of credit and loans, as well as a record of delinquencies, collections and bankruptcies. You have the right to view your credit report and see what types of debts you owe or what impact your debt is having on your credit score. A person is entitled to a free credit report once a year from each of the three credit reporting agencies: Equifax, Experian and TransUnion.
Dispute errors. If you find a mistake on your credit report, file a credit report dispute with the credit bureau that provided the report, either online or by mail. You can also directly contact the debt collector or other source of the incorrect information, such as a credit card company or bank, to dispute the error. If the bureau finds that there was an error, they will remove it from your report. If the debt collector finds an error, they will send a notice to all of the credit reporting bureaus to remove the error from your reports.
Know the rules on medical debt. The three credit reporting agencies must wait 180 days before including medical debt on a person’s credit report. This waiting period is meant to give the person time to resolve disputes with insurers and deal with delays in payment. If medical debt shows up on a credit report, the credit reporting agencies will remove the debt from the credit report once it is paid. This removal may not be automatic; you may need to ask to have the debt removed from your credit report.
Review medical bills for errors. Billing mistakes can cost patients a lot of money. Review your bills to ensure that you aren’t charged for services you didn’t receive and to look for other errors.
Deal with debt. You should generally pay for your living expenses, such as food, housing, utilities or car payments, before paying medical debt. Medical debt is unsecured debt and should generally not be paid before secured debt. Secured debt, such as a car loan or mortgage for a house, is tied to collateral. If a person does not make payments on a vehicle or a house, the lender can repossess the car or foreclose on the home.
While some may have no other options but to pay medical bills with a credit card, you should carefully consider this option. Paying your medical bills with a credit card may reduce your options for negotiating your debt. Credit card companies typically do not negotiate with people to reduce debt or interest or to allow them to change their payment plan, whereas medical providers might show more flexibility. Additionally, because credit card companies charge extremely high interest rates, you may end up paying much more than you initially owed for a medical bill.
Ultimately, if you are overwhelmed with debt and other expenses, look at all of your bills and prioritize which ones to pay first based on their urgency or on your need.
This article is meant for educational and informational use only. This article is not intended as legal or medical advice and should not substitute for an individual legal consultation with an experienced attorney in your state.
For more tips or answers to cancer-related legal questions, contact the CLRC at 866-843-2572 or visit cancerlegalresources.org.
November 22, 2019