Keep medical debt from being reported to credit bureaus

Your Business Credit columnist Elaine Pofeldt
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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Question Dear Your Business Credit,
 I own a small business and my credit score is very important for that. I have a doctor’s office telling me that they will not send my bill to collections and the lab will “claim” the bill “as a loss.” Will this affect my credit score? Can I trust them? Is this a normal practice? – Kat

Answer Dear Kat,
Unpaid medical bills damage many Americans’ credit scores, so it’s a good thing you are paying attention to this.

There are some missing pieces to your story, such as the history of this debt, so I’ll answer your questions based on what I do know. What I would usually recommend if someone can’t pay a medical bill is to immediately try to negotiate a payment plan with the provider. You can do this on your own or, if a bill is especially daunting, turn to a medical negotiation company. These companies, staffed by medical billing experts, will look for overcharges and coding errors that may be inflating what you are being asked to pay. In exchange for a cut in what they save you, they will renegotiate a bill with a medical provider for you.

Given that your doctor’s office is bypassing the typical approach of sending a late bill to collections, I’m going to assume that this bill has gone unpaid for a while. Perhaps your doctor has attempted to collect from you repeatedly with no success, isn’t willing to pay a collection agency and has lost hope that you will pay. He or she may have decided to charge off the loss instead of wasting more paid staff time going after you. Then the bill won’t be an active receivable in the medical practice’s accounts. As long as that’s all there is to it – an entry buried in the books of the doctor’s accounts – you are fine. Your credit will not be affected.

However, if the office reports the charged-off debt to any of the credit bureaus, that’s the moment your credit gets hurt, and the damage can be substantial. The better your credit was to start with, the more points you will lose from a single charge-off. The notation of the debt, known in the credit world as a tradeline, will remain on your credit report for seven years.

Unpaid medical debts mar about 1 in 5 consumers’ credit reports, according to the federal Consumer Financial Protection Bureau. How the debts get into the files of credit bureaus varies greatly.

As the bureau put it in a December 2014 report:

“There are no objective or enforceable standards that determine when a debt can or should be reported as a collections tradeline. Creditors may elect to sell a debt to a debt buyer or send a debt to a third-party collections agency or in-house collections department at varying times in the collection cycle. Debt buyers and collectors determine whether, when, and for how long to report a collections account as a collections tradeline. Practices vary by type of account and within particular industries.”

You have caught one big break in that the doctor’s office says it will not send the bill to collections. Collectors, particularly third-party agencies, are more likely to report the debt to the credit bureaus.

The key question, though, is whether the doctor’s office will report your debt to the credit bureaus. That’s what you need to determine. Call the office back and ask.

If they will not report it, you have caught another big break.

If they say they have already reported it, you are too late. All you can do is pull your credit report from to assess the damage.

If the answer is “maybe,” or “soon,” you still have a chance.

See if there is some way to pay the debt. I’m not sure of your reasons for not paying it, but if there is some way to come up with the money, I’d highly recommend doing so, to protect your credit score. If the bill is substantial and you can rustle up half of it, then perhaps the medical office would still be willing to work out a payment plan with you. Many medical offices, especially small independent ones, are under tremendous financial pressure and struggling to stay afloat, so my guess is that they would rather get the money than charge it off.

Good luck!

See related: CFPB moves to soften impact of medical debt, How charge-offs work, how they affect your credit

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Updated: 01-17-2018