Be very careful before taking out debt consolidation loans for unpaid medical bills. A relief program could be a better option. Learn the pros and cons.
Medical debt often appears as negative payment history on credit reports, which then affects generic risk scores used to make lending decisions. Leftover medical bills will continue to increase as health insurance policies migrate to larger deductibles, and smaller provider networks.
Debt consolidation loans are one of many options for consumers to counteract medical debt collection agency practices. They often have the law on their side, but so do you.
Learn how the industry process works to identify ways to fulfill your obligations without breaking the bank, or ruining your credit score for years on end.
It would be nice is laws existed that wiped away medical debt credit history. It seems unfair that people who get sick or hurt get lumped together with those who overspend, or fail to manage their finances properly.
Learn about what existing laws say about what appears on your reports, and what collection agencies can and cannot do.
Negotiating a lower settlement on your unpaid medical and hospital bills in collections will save you far more money than taking out a consolidation loan. Try this avenue first.
Combining your obligations into one payment and stretching out the terms does not reduce your obligations. Origination fees and interest charges only serve to make it grow.
Medical debt can stain your credit history for a very long time. Your consumer report may show a past due amount for seven years. If the account goes to a collections attorney, a lien may extend the time the debt remains on your report.
Your medical debt may affect your risk score as well. The debt does not just disappear without positive action, or a little bit of luck.
One of the biggest challenges of obtaining a debt consolidation loan for unpaid medical bills is that they frequently appear on your consumer report. Once there, they often suppress your credit score, which makes it very difficult to qualify.
A settlement program does not have a minimum credit score requirement, and may prove a better option if your history is already tainted.
Using a credit card to consolidate unpaid medical bills has more disadvantages than benefits. You could wind up hurting your credit score for years and reopening the door for creditors to haul you into court.
People with the resources to pay the balance in full every month have the greatest flexibility to earn rewards points. Copayments and deductibles add up very quickly.
A negative medical debt credit history can follow you around like a bad penny. It may even affect you when trying to buy a house.
Mortgage lenders will consider your debt to income ratio, your credit score, and other factors when evaluating your application. The amount you owe doctors, dentists and hospitals do not help your cause.