Can an unpaid medical bill cost you more than the bill itself - even the purchase of a new home?  You bet it can. 

In a recent article in USA Today they share the story of a couple who had a $200 medical bill sent to collections. Though they ultimately paid the bill off, the result on their credit report was a lowering of their score by 100 points!  This meant they needed to pay additional discount points to secure their home loan costing them $2,500.

(to read the full article click here http://yourlife.usatoday.com/health/story/2012-03-05/Medical-bills-can-wreck-credit-even-when-paid-off/53367464/1)  It is worth the read.

This article was of particular interest to me since I had recently attended a workshop specifically on credit scores.  In it they shared real life stories of folks who had, for example,  a $75 medical billing error.  They refused to pay and it was ultimately sent to collections which they ignored since they did not owe it. This decision ended up costing them thousands because of the effect on their FICO credit score - lower score often equals loan denial or higher interest charged.  They ultimately had the error corrected, but it took longer to remove the collection from their credit report.

So what is a consumer to do?  Protect your credit score at all cost.  Yes, even if it means paying something you don't feel you owe especially when it comes to a medical bill.  In the complexities of medical billing and insurance there are bound to be errors.  Keep meticulous track of all your bills, statements and EOBs (explanation of benefits).  Remember that doctor's and hospitals really aren't about taking money they aren't owed (though it may feel that way). If you find an error, bring it up immediately DO NOT ignore it. Send copies of documents proving your point. If it does not resolve quickly and they are threatening with collections (something that is often an automated letter) call and speak to a real person to make a note in your file.  If that doesn't work - pay it - then continue your fight. Does that seem unfair? Yes, but you have to ask if a $75 bill is worth not being able to buy your new home.  For most folks it isn't.

For more insights on how to help your FICO score, please contact me.  karen@karensherrill-homes.com