Can Unpaid Medical Bills Damage Your Credit Score?

Medical debt isn't included in your credit report if you stay with your original service provider, but once it goes into collections, it's likely to have an impact on your credit score. These debts can stay on your credit report for up to seven years, although the new rule will now eliminate them if they are settled. Medical bills won't affect your credit as long as you pay them. However, medical debt is handled differently than other types of consumer debt.

Since most healthcare providers don't report to credit bureaus, your debt would have to be sold to a collection agency before it appears on your credit report. Most healthcare providers won't sell debt to a collection agency until you're 60, 90, or even 120 days or more in arrears. The exact time this happens depends on your healthcare provider. Unpaid medical bills can be sent to debt collectors, at which point they may appear on your credit reports and affect your rating.

A low credit score could mean a higher mortgage rate or prevent you from qualifying for a mortgage. Unpaid medical bills can be sent to collections if you don't pay them. If you pay your medical bills with a credit card, it could also affect your credit, especially if you can't pay that balance or make the minimum payment. If your medical bill is being collected in error and is affecting your credit score, you may be wondering if it can be eliminated.

The damage to your credit depends on the type of rating model and the version used by a potential creditor to verify your creditworthiness. Even if you have health insurance and the bill is a covered expense, you may have to wait months for your insurance company to approve and issue the payment to the health care provider. Starting in July, credit bureaus will remove all paid medical debts from credit reports. The three major consumer credit bureaus, Experian, TransUnion and Equifax, give you a 180-day waiting period to resolve any medical debt before the collection account appears on your credit history, so medical bills won't affect your credit score immediately.

When you or your insurance company pays a medical bill that was in collection, the account will be updated to show that it was paid. This move will erase approximately 70% of negative comments on medical debt, which will give many people a hopeful leap in their credit rating. Some scoring models give less weight to outstanding medical debts than other types of collection accounts. If you're facing increasing medical expenses, there are a few things you may want to consider to avoid accumulating debt on medical bills.

Ask them to explain each part of the statement or ask for an itemized invoice to see how much you were charged for each service. In fact, medical debt remains the main reason debt collectors contact consumers, according to the Journal of the American Medical Association.

Angie Licata
Angie Licata

Award-winning zombie evangelist. Proud pizza advocate. General zombie practitioner. Tvaholic. Award-winning travel maven.

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