Credit Report Source

Credit Report Source is often surprised to learn that many people have no idea that overdue medical bills can severely damage their credit scores. Well not just credit scores, according to the American Journal of Medicine, 29% of bankruptcies in the US are due to medical bills. In fact, Ohioans, I imagine many Americans feel the same way, feel they are not responsible for their overdue medical expenses. Just take a look at this interesting survey from Intuit. The fact is we all are responsible whether we like it or not. When we sign on with an insurance provider we entered into an agreement to resolve all outstanding medical bills and when we neglect that responsibility we may find ourselves stuck with a collections record on our credit report for 7 years!

Neglecting overdue medical bills can hurt your credit score. So much so that it will have a long lasting and cascading negative effect on your credit card interest rates not to mention your overall self-esteem. I mean who actually likes to know that they have a bad credit score?

Below are some of the few things you can do depending on what sort of situation you are in. Whatever you do, Credit Report Source’s advice is to confront your responsibilities to the best of you ability and do whatever it takes to protect your credit score.

1. Don’t be afraid of your bills! Open and review all of your bills no matter how scary and depressing this maybe. Confronting your expenses is the first step in dealing with a problem should you have one.
2. Savings, savings and savings! I know this is difficult to do during a recession, let alone if you’re laid off. However, I recommend trying to skip a few times eating out or try to avoid unnecessary expenses. Take a look at your daily activity, can you skip buying a cup of coffee a day or two a week? Can you reduce your cell phone or cable bill for a month or two? There are probably other types of discretionary spending you can identify and cut back on. Take that money you would save and put it aside in an interest bearing savings account.
3. Flexible spending accounts. If you are employed, check with your employer and see if they are participating in a flexible spending or “cafeteria plan” type program. A flexible spending account allows you to put aside some money from your paycheck, tax free, which can then be used to pay for medical expenses. The money you put aside is usually placed into a debit/visa type card which you would use to pay for co-pays or medicine, etc. This is a smart way to avoid having to pay “out-of-pocket” for some of your medical expenses.
4. Communicate with your Insurance Company. Most companies, I like to think, do not want to harm your credit report in anyway. If you owe money, call them and setup a payment plan. They usually do this interest free. Unless, if you are unable to pay at all then see if they would allow you to put a hold on the account and collections activity until your employment situation is resolved. You generally would need a letter faxed from your employer stated that you are unemployed, etc.

We sincerely hope these tips are useful and would love to hear from you and your own experiences.

Credit Tips, Medical Bills