NEW YORK (MainStreet) — Do you know the differences between medical debt and other kinds of debt? Your credit score might depend on it. Medical debt, much like utility debt, is one of those things that only appears on your credit report when it's bad. This means that you're not getting brownie points for timely payments -- just penalties for when you're behind. What's more, you might have medical debt on your credit report you're not even aware of.

Medical Spending Is Different From Other Kinds of Spending

Randy Padawer, a consumer advocate with LexingtonLaw, points out that spending on medical bills is different from nearly every other kind of spending. "When you go to the doctor you haven't even been diagnosed yet," he says, adding that "you don't know how much procedures will cost or if your insurance is going to cover it."

What this means is that you might start getting bills while you're still working out whether or not you need to pay the bill in the first place. One kink is the Health Insurance Portability and Accountability Act. "No one can talk to a third-party debt collector," says Padawer, "not even your insurance company." The hospital might be able to, depending on the disclosures you sign when you're checked in. However, the privacy protections in place make it difficult for all parties involved to discuss your debt, meaning that you will have to do a lot of the legwork.

Medical Debt Only Appears On Your Credit Report in Collections

"The Consumer Financial Protection Bureau just did a report that says a lot of the time medical debt on your credit report can be misleading," says Matt Schulz, a senior industry analyst with Schulz says the report found that people who have medical debt in collections are generally on top of their other bills and debts. So why aren't they paying off their medical debts?

"A lot of times people don't even know that they have this debt until it enters collections," he says. Reason being, medical billing is notoriously Byzantine. Schulz points out that even when people are aware they have medical bills, they might still be in the process of wrangling with their insurance company.

Getting Medical Collections Off of Your Credit Report

Here's where things can really get confusing: even when you pay off medical debt in a timely fashion it can stay on your credit report.

"Once you pay it off you need to appeal to the credit agency and show them proof that you've paid it," says Schulz. You or your insurance company might have paid the doctor or the hospital before you even find out the account is in collections. This is why it's important to keep a paper trail when you paid off medical bills.


"Getting it off is tough," says Padawer. "Often times you can't." Padawer urges you to validate the debt in accordance with the Fair Debt Collection Practices Act. "Research the statute online and consider hiring professional help," he says, noting that the FDCPA allows consumers the opportunity to make third-party collection agencies prove that they owe the debt with a simple letter. If and when the company does prove that you owe the debt, Padawer urges that you pay.

"It can become even crazier when one third-party collection agency sells the debt to another," says Padawer. This makes the debt one more layer removed from you. "In the case of charged off debt, almost no one ever believes the consumer," says Padawer.


In the meantime, if you're having trouble getting the collection account removed from your credit report, you can always add a notation while you sort things out. "You can put 100-word statements that tell your side of the story," says Schulz. Once the account is settled, you can get the statement -- along with the collection account -- removed.

-Written by Nicholas Pell for MainStreet