The Washington Post reports that a study by the nonprofit Commonwealth Fund determined that 72 million reported difficulties in paying outstanding medical bills and 28 million were contacted by collection agencies over a two-year period.

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The problem is that any collection has a significant impact on credit scores, and credit reporting companies don't distinguish between those that come from something consumers have little control over--billing and payments between medical offices and insurers--and stuff like that bad check to a pizza joint written in an intoxicated haze and blown off for two years.

Should medical collections be treated differently?

Critics say that medical bills are different from other accounts because it's not like we just decide to get sick, as if it was similar to tossing a pair of Jimmy Choos on the VISA or buying a huge-screen before Super Bowl Sunday. Medical collections don't necessarily indicate poor money management.

Data from the National Credit Reporting Association indicates that in extreme cases credit scores can take a hundred-point hit from a collection account--unfair when you understand that many medical collections stem from disagreements over co-pay amounts with insurers or billing issues with medical offices. These offices tend to quickly hand over unpaid or disputed bills to collection agencies, which then report to credit bureaus.

How costly?

Even if you can get a lender to disregard your medical collection and approve your loan, the decrease in your credit score is costly. Fannie Mae, for example, a borrower with a 639 score will pay an extra 3 percent in fees over someone with a 41 point higher score of 480. That's an extra $9,000 on a $300,000 loan because your doc's office got in a spitting contest with your insurance company!

Congress may take action

The proposed bi-partisan Medical Debt Responsibility Act, if passed, would require Equifax, Experian and TransUnion to erase medical collections of $2,500 or less from files within 45 days of their being paid or settled. Today, paid-off collections can remain in files for as long as seven years. The bureaus oppose the bill.

What should you do?

If your credit has been trashed by medical collections but you have been paying your other bills on time, try Federal Housing Authority (FHA) mortgage lenders. There are no surcharges for lower credit scores, but if your score is lower than 580 you would be asked to come up with 10 percent down instead of 3.5 percent down.

In addition, FHA lenders don't look at medical collections the same way they do drunken pizza collections. Bad credit home loan companies are also less likely to care about such things, as are hard money lenders. Try completing the form on this page for a shot at getting approved for a home purchase or refinance.