Medical Billing Errors Can Ruin Your Credit

You pay plenty for medical insurance and you count on it to pay your medical bills so you don’t have to worry about them should you get hurt or become ill. Once you’ve covered the co-pay you should be home free.

And you should. But unfortunately that’s not the way it works.

All it takes is for a data entry person to code your claim incorrectly, and your insurer will disallow the claim. In other words, the bills won’t be paid.

Unfortunately, the people doing data entry are generally minimum wage workers who are only “putting in their time” and don’t really care if they make errors, as long as they can get through the day and go home. It really doesn’t concern them if your insurer disallows the claim – or if the doctor or hospital ever gets paid.

So, what happens? There you are, doing your best to recover from illness or injury, and these bills keep arriving. The medical field is notorious for sending garbled bills that require some kind of degree to decipher – and they send them in little spurts, so it’s difficult to see if they’re all different, or duplicates. It’s even hard to figure out if you actually got the treatments they’ve itemized, because they have strange names and codes.

So you set them aside, assuming that eventually all the bills will find their way to your insurance company and will be paid.

Then, after several months or even a couple of years, you begin getting collection letters – and you realize that your credit score is in the basement because of bills you assumed had been paid.

Here’s what to do:
• Get the medical claim number from the collection company
• Call your insurance provider and discuss what the problem was
• Get something in writing from the collections company to delete collection from all 3 credit bureaus after you’ve verified there was a code entered incorrectly.
• Once you receive this letter, mail it via certified mail, along with a dispute letter, to each of the credit reporting agencies listed below. Then be patient, because it takes about 30 days to delete misinformation.
• After 60 days, pull your credit report to make sure all 3 credit reporting agencies have removed the collections.

It’s true that certain lenders disregard medical collections – just as some disregard collections from health clubs because of their unethical practices. However, some creditors will look only at the overall score – and those medical collections will definitely lower your FICO score.

The three major credit reporting agencies:
P.O. Box 740256
Atlanta, GA 30374

P.O. Box 9595
Allen, TX 75013

Trans Union
P.O. Box 2000
Chester, PA 19022-2000

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Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.