Horrendous credit

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ilovefishing

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Not sure if this has been asked, but here is my situation. I am a 4th year medical student who has racked up a lot of medical bills in the last 10 years (lots of ER visits as well as minor surgery). I didn't have insurance before med school because I was working a minimum wage job while supporting my family. Now my credit score is terrible (don't know the exact number) and I still have to pay the most recent bills (over $5,000 in medical expenses). There is no way I can even begin to put a dent in what I owe. My question is, what is the best way to tackle my medical bills and simultaneously start paying back loans while in residency. What would help me build good credit so that I can have the option of buying a house later down the line? Thanks for your help!

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Get your credit score so you know what it is first.

Are the medical bills in collections? Is the horrible credit from that?
If so, negotiate them, pay them slowly, as they get paid, scores will be better.

You can put the student loans on forebearance till you are done, so that won't effect your credit.

Manage the ones you need to pay first, make a plan. Live below your means.

My friend (ER Physician) had 535 credit. In 30 months, he is now at 710, by being very very diligent.
 
I'm not a financial expert, but here is what I would do: First, get a better idea of where you are really starting. Get your credit reports from all three major credit reporting agencies from annualcreditreport.com. Make sure everything in those is accurate and contest anything that isn't. Also, get your credit score for free (I think there are a couple places that you can do this, but I have only used Quizzle). Don't be too alarmed by your credit score -- the amount and number of loans we take out for medical school drag it down too.

Also call the hospital(s) ASAP and figure out if you qualify for any discounts or charity care. Since you presumably don't have any income outside of loans, you may be all to get part of all of the bill written off. Even if you can't, there are often significant discounts available for things like paying cash or paying within a certain period of time. Make a doable payment plan with the hospital and make your payments on time. Do not let your bills go to collections!

Unless the hospital bills are reported to the credit bureaus (which doesn't usually happen unless they go to collections), the hospital bills should not affect your credit, so just stick to the payment plan for those. Any extra money can go toward your loans, savings, or whatever else you need it to. There is a lot of information on these boards about the best strategy for tackling loans (some people swear by trying to pay them off as fast as possible, others swear by IBR and hoping for PSLF in 10 years, etc.), so I won't go into that. However, I will urge you to think about your finances as you pick your location for residency. Residency salaries don't vary that much across the country, but the cost of living does. $50,000 a year will go a lot farther in, say, Nebraska than New York City.
 
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Thanks for the great advice! I matched at a program with a really low cost of living, ao I am happy about that. Unfortunately most of my medical bills have gone to collections already :-\ I have a few that have not and I have worked out a payment plan with them. I will definitely get my credit report!
 
Build it up. Its like getting a C on the first exam in class. 4 months left in Semester.

You have time...
 
Pay your bills and eventually your credit score will be fine. Seriously. It really does grade what it is supposed to. There are a few little tricks to it which are easily googleable, but if you just pay your bills over the next few years your credit score will be adequate to buy a house, and that's really all you should use it for anyway.
 
Credit repair can be a game. It may be more than is worth if you're starting PGY-1 soon, so just do as above and go on auto-pilot.

But if you do have several spare hours, creditboard.com/forums is an excellent crash course. There's medical collections specific tricks that work for that niche vs other types of trade lines. All sorts of FCRA/FDCPA do's and don'ts there. I started in 2006 reading and learning and I'm just about to break through 800 FICO credit scores on all 3 credit reporting agencies. Slow and steady will win the race, but there's some [legal and ethical] tricks that will get you there faster if you have the time to learn how to negotiate and dispute. (And learn to do things in writing certified mail vs. the phone).

Re: credit scores. FICOs the big gorilla in the room, and they have 20+ different scoring models (mortgage-weighted, auto loan weighted, credit card weighted) but I digress. Point is there's lots of "FAKO" credit scores out there and lots of TV and Internet commercials trying to sell you a fake credit score -- if you get a free one, take it with a grain of salt. They can differ a lot from your real FICO. Your 575 might be 625.

Also, the FICO 2008 scoring model was implemented in 2010 or so, and "small" collections don't hurt as much as they used to. There's also tips for PFD (Pay for Delete) where you negotiate a special payment plan and get in writing that they will DELETE the delinquent trade line if you pay an agreed amount.

Lots to learn if you want to learn the game. Or just keep up the good fight and good luck in residency!
 
on a side note...emotionally detach from the situation. Don't let a debt collector get you emotionally distraught. You owe money, and when you have it, they will get it back....it will come at the pace that you can pay and they can jump off a cliff. I went through a bankruptcy after a business failing and the best thing for me was the moment I told myself, "I don't have to take crap from them on the phone"
 
You guys are awesome! I will definitely look at the creditboard.com forums and see if I can figure out how to get the collectors off my butt. SB247 you are so right! The phone calls and letters are causing some emotional distress. I need to learn to brush it off and not let them get to me.
 
Also look at myfico.com to get informed on PFD and HIPPA.

A lot of the strategies (i.e., blanket disputes) from the other site can be iffy.
 
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