A while back in my career, I was working on a mortgage loan for a long-term client who had a very common name, and I noticed the client’s credit score was in the 670s. This came as a surprise to me since he was not the type to miss payments. After further review, I noticed there was an item from a collection agency showing an outstanding balance of about $400.00. I reached out to the collection agency and discovered that it was from an unpaid medical bill and it had been on his credit report for three years.

Having an unpaid medical bill, even one as little as $50.00, can affect your credit score. Typically, if you don’t negotiate a payment plan with the provider, a medical bill that isn’t paid within 90 to 180 days can go to a collection agency so the medical provider can write off the debt. This is reported to the credit agencies as an “Unpaid Collection” and can stay on your report for up to seven years.

After speaking with my client, he reassured me he’d paid all his bills. In fact, he could not even remember even going to a doctor in the previous five years. He had not received any letters from a medical provider or a collection agency. This made me think that the unpaid collection could have been assigned to the wrong individual.

Results of a study by the Federal Trade Commission show that one in five people has “material” errors on their credit report that can lower their credit score. Estimates show that each of the three credit bureaus has more than 200 million credit files that contain an average of 13 past and current credit obligations, which adds up to more than 2.5 billion data points. With that much volume, you can imagine the errors that happen, especially with common names.

I did extensive research on my client’s rights and the process in disputing this claim. It turned out that the unpaid medical bill was for a different individual with the same name. The clue that gave it away was the other person lived in Montana! We had to spend quite a bit of time sending documents and letters to the credit agency to prove it was not his collection debt. It took another 12 months for his score to raise above 700 due to the error.

I urged my client – and now all of you – to take time to check your credit report every year. It can save you a ton of money, time, and hassle down the road. Fixing errors right away is a critical component of maintaining the accuracy of your credit score.

Check out my article, “Discovering and Correcting Errors on your Credit Report” in the Winter 2020 issue of Enlighten Magazine for steps you can take if you happen to find an error.