Do Paid Medical Collections Affect Your Credit?

Your credit reports are full of data about paid and unpaid accounts. Creditors charge off unpaid bills and sell them to debt collectors, who add harmful notations on your credit reports. Medical bills that go to collections stay on TransUnion, Equifax and Experian credit bureau reports for many years, even if you eventually pay them off, unless you negotiate removal. Those accounts affect your credit as long as they are visible to other creditors.

Effect

Your credit score is based on credit bureau information. Medical collections count as part of your payment history, and payment history accounts for 35 percent of your three-digit credit score, according to the MyFICO scoring company website. Paid medical collections are still negative items on your credit report, because they indicate you previously neglected a bill to the point of having it charged off.

Time Line

Medical bills are unsecured debts, which typically get charged off and sold to collection firms after about 180 days for non-payment, according to MSN Money writer Liz Pulliam Weston. The Federal Trade Commission (FTC) website warns that collection accounts remain on credit reports for seven years. They have the most damaging impact within the first few years, because lenders are most interested in your recent financial performance. A paid medical collection loses most of its negative effect in the last years before TransUnion, Experian and Equifax erase it.

Removal

Medical collection companies purchase unpaid doctor, hospital and ambulance bills for much less than their face value. These firms profit by getting debtors to pay as much as possible, so you have negotiating power before making your payment. You might offer a discounted lump sum to be accepted as full settlement and require the collector to remove the bill from your credit reports as part of the agreement. You should obtain written confirmation of the agreement prior to payment, advises Bankrate debt adviser Steve Bucci. The paid medical collection account loses all its influence once it disappears from your records.

Considerations

You may be able to erase paid medical collection accounts from your TransUnion, Experian and Equifax records if the firm made any mistakes in reporting the data. Search even for small errors, such as a wrong date or an amount that is a few dollars off. If you detect errors, dispute the collection account with all three credit bureaus, because they gather and report data separately. They must stop reporting the account if the collection agency does not verify the information. The Divorcenet website explains the bureaus sometimes drop disputed data without investigating it, or collectors may simply disregard the request for verification. The account loses its impact if it is erased because of the dispute.