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Small medical bills can lead to big problems for your credit

If you've ever had to seek medical treatment, you know that small medical bills can trickle through for several weeks or months. Sometimes, these bills may be misplaced, and things do happen that make them harder to pay. Unfortunately, even these small bills can affect your credit and slip through the cracks, making it hard to fix a damaged credit score.

Medical bills are complicated. It can be hard to know what co-pay you have to pay, when the due date is, and even how much you owe. You need to be proactive, though, because missing medical bills leads to medical collections, and medical collections can seriously damage your credit.

What makes medical collections worse is that there are no set standards. There is nothing saying when the debt can be submitted to collections or when it should be reported. Around 22 percent of consumers in collections tradelines have only medical bills affecting their scores.

It's shocking how fast your medical bill can affect your score. A bill of at least $100 can affect your FICO score of 780 or higher by around 100 points. People with lower scores, 680 up to 780, tend to lose around 40 points. Even though this doesn't seem like a horrible credit score even after the drop, it can affect interest rates, make loans harder to get and affect your finances overall.

To avoid this, stay vigilant. Pay for your medical services when they are provided if you can. Don't ask for an invoice before you pay, since this can lead to confusion and unnecessary collection activities.

Source: Forbes, "How To Prevent Small Medical Bills From Destroying Your Credit Score," Nick Clements, March 04, 2016

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