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What happens to your credit report if the insurance company did not or will not pay?

Most often, if an insurance company pays off your bills, the note about the non-payments gets off your credit record. However, in case the insurance does not pay off or you are tired of waiting and repay the bill yourself, not even saying about cases when collection agencies begin dealing with your case, you will get a mark on your credit history. And this note will be a negative one, but the amount of caused damage will depend on the scoring model used by the lender (hospital in this case).

For example, FICO 8, which is still commonly used everywhere, does not differentiate between the paid and unpaid bills. As soon as your case gets to the collectors, your score is lowered. Yet after repaying the bills to the collector, you get the peace of mind that you will not be sued later.

The FICO 9 scoring model is similar to the VantageScore 3.0. Both of them disregard collections accounts provided that they have been paid off. Moreover, FICO 9 also assigns lighter weight to the medical bills in collections if compared to the rest of unpaid accounts. Unfortunately, these new updated models are not that widespread among lenders yet.

Once you get a negative mark on your credit report, it will remain there for seven years.

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