Will Paying Medical Bills Improve Credit?

Doctors and hospitals do not normally add medical bills to your Experian, TransUnion and Equifax credit reports if you pay them in full or through mutually agreeable payment arrangements. Your payments do not improve your score unless you charge the bills on a credit card and repay it in a timely fashion. Unpaid medical expenses hurt you if they go to a debt collector, but you have ways to fix the damage.

Settlement Agreements

Some collection agencies work for doctors and hospitals. Others buy bad debts that get written off by the original medical providers. Debt collectors in both situations will often negotiate a settlement with you that improves your credit in exchange for partial or full payment. Negotiate a mutually acceptable amount, but insist on removal from all three credit reports as a condition of the deal, Bankrate.com writer Brigitte Yuille advises. Make the collection agency put this promise in writing before you put up the money. Otherwise, the paid medical account looks just as bad because it still shows you had an account in collections.

Credit Disputes

Paid medical bills are sometimes removable from your credit reports even if you did not get an agreement with the creditor before you sent your money. Collection agencies often have incorrect information that gets passed along to the credit bureaus. For example, they might not have an accurate date for the bill or be slightly off in the debt amount. You get to dispute the entry with Experian, Equifax and TransUnion if you find even a tiny discrepancy. The Divorcenet website explains that creditors often ignore validation attempts on old or satisfied accounts, which forces the credit bureaus to erase the information completely.

Time Frame

Collection accounts for medical bills only hurt your credit for a limited amount of time. The Federal Trade Commission explains that Experian, Equifax and TransUnion erase them in seven years, whether or not you ever paid them, which automatically improves your credit.

Warning

Medical bills, like other debts, are only legally collectible for a certain time period, based on your state of residence. Firms called zombie debt collectors buy bills for pennies once the statute of limitations expires and try to bully people into paying them, even though there is no legal obligation, according to MSN Money writer Liz Pulliam Weston. The old medical bills should already be gone from your credit reports, and paying them will not improve your credit. You hurt yourself if you send even a small amount to a zombie collector because this restarts the legal collection period in many states.