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How Medical Debt Affects Your Credit and How O1ne Mortgage Can Help

Medical debt can be a significant burden, especially when it threatens to impact your credit score. Understanding how medical debt affects your credit and knowing your options can help you manage your finances more effectively. At O1ne Mortgage, we are committed to helping you navigate these challenges. Call us at 213-732-3074 for expert mortgage services.

What Happens When Medical Debt Goes to Collections?

When a medical bill is not paid on time, it can be sold to a collection agency. This agency may report the debt to one or more of the three major credit bureaus: Experian, TransUnion, and Equifax. Typically, there is a one-year grace period before the debt is reported, giving you time to resolve any insurance or billing issues and make payment arrangements.

Impact on Your Credit Score

An unpaid medical collection account can negatively impact your credit score if it exceeds $500 and remains unpaid after one year. Medical collections under $500 do not appear on your credit report and will not affect your credit scores. If the debt is sold to a collection agency and reported, it can stay on your credit report for up to seven years from the original delinquency date.

Steps to Take When Your Medical Bills Go to Collections

If you find yourself unable to pay a medical bill, it’s crucial to contact the medical provider immediately to discuss your options. Some providers may be willing to set up a payment plan to help you avoid collections and preserve your credit history.

Working with Collection Agencies

If your debt has already been sold to a collection agency, here are some steps you can take:

• Contact the collection agency to work out payment arrangements. Some agencies may offer a settlement amount, but be aware that settling for less than the full amount owed can still negatively impact your credit.
• Understand the statute of limitations for debt collection in your state. This does not affect how long the debt appears on your credit report but can influence how long the creditor can legally attempt to collect the debt.
• Ensure your credit reports are updated once the debt is paid off or reduced to under $500. The collection agency should notify the credit bureaus, and the account should be removed from your credit report.
• Dispute any inaccurate information on your credit report. If your account hasn’t been updated after a couple of months, you have the right to dispute the information with the credit bureaus.

Rebuilding Your Credit After Medical Collections

Rebuilding your credit after a medical collection can be challenging, but it’s not impossible. Here are some steps you can take:

• Pay off any past-due debts, including the medical collection account.
• Make all your payments on time going forward. Consistently positive payment history will help your credit scores rebound over time.
• Pay down your credit card balances to keep your credit utilization rate low, which is beneficial for your credit scores.
• Consider signing up for Experian Boost® to get credit for on-time utility, cellphone, and streaming service payments.

How O1ne Mortgage Can Help

At O1ne Mortgage, we understand that managing medical debt and maintaining a good credit score can be overwhelming. Our team of experts is here to help you navigate these challenges and find the best mortgage solutions for your needs. Whether you’re looking to buy a new home or refinance your existing mortgage, we offer personalized services to help you achieve your financial goals.

Don’t let medical debt stand in the way of your dreams. Contact O1ne Mortgage today at 213-732-3074 for expert advice and assistance with all your mortgage needs. Our dedicated team is ready to help you find the best solutions to manage your finances and improve your credit score.

Remember, taking proactive steps to manage your medical debt and rebuild your credit can make a significant difference in your financial future. Let O1ne Mortgage be your trusted partner in this journey. Call us now at 213-732-3074 and take the first step towards a brighter financial future.

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