It's kind of crazy, isn't it? The high-rollin' cokeheads of Wall Street crash the economy and collect multi-million dollar bonuses, while you can't get a second mortgage because you were a few bucks short on a co-pay. I guess it's your own damned fault for not forking over the dough to Freecreditreport.com!

Two erroneous $11 doctor bills stopped Jeanne White from refinancing her home.

The 49-year-old resident of Colleyville, Texas, pays 7% on the mortgage for her three-bedroom house. In October, she says, she was shocked to learn that the two medical bills, which had been turned over to a collection agency, had caused her credit score to fall to 680 from 757—making refinancing far too expensive.

"I was told I'd have to pay $14,000 in closing costs to get a 5.5% interest rate," Ms. White says, substantially more than she would have paid with a higher credit score. When Ms. White, a retired sales manager, contacted the doctor's office, she found out the bills had been issued in error.

Ms. White's case is hardly an isolated one. Otherwise well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes marring their credit, say mortgage bankers and real-estate agents.

Jeanne White of Colleyville, Texas, saw her refinancing costs skyrocket after her credit score was dinged by two disputed $11 doctor bills—and is now in limbo as interest rates rise.

Rodney Anderson, executive director of Supreme Lending, a mortgage bank in Plano, Texas, calls medical debt the single biggest roadblock for would-be refinacers. "People have no idea that they still owe small amounts which later end up on their credit report," he says.