Will Medical Bill Affect Credit Score?

It’s bad enough to be in a situation where one has to pay a lot of medical bills without having to worry about it affecting credit scores as well. However, unlike other debts, medical bills that are not paid can still make their way into your credit reports and affect your score. Here is what will help you to understand how medical bills can impact your credit.

How do Medical Bills Affect Your Credit Report?

Not paying medical bills on time also results in the invoices probably being sent to collections companies. Your credit score will then drop if the collection agency notes this unpaid medical obligation with one or all of the three main credit reference organizations.

According to fresh Consumer Financial Protection Bureau statistics, 54 percent of trade lines collected point to medical expenses. Furthermore, the average medical debt came out to be $579, which is less than debt in collections like credit card debt.

Fortunately, credit rating systems such as the FICO have realized that medical debt is not like other debt. Among other things, unpaid medical bills do not lower the credit score as much as failing to pay a credit card debt. Paid medical collection accounts will thus not affect FICO ratings beginning July 2022.

But it is still safer to pay for medical bills in collections when possible to avoid further credit score drop. Besides, it will help you feel more secure when you decrease this debt.

How Long Do Delinquent Medical Bills Affect Credit?

In case an unpaid medical bill is reported to collections, it can remain on the credit report for as long as 7 years from the initial time the debt was reported as delinquent, and not paid. This is the case even if over time you manage to settle the medical collection account in full.

However, medical collection accounts have a lesser adverse effect on credit scores over time than any other collection accounts. According to FICO credit scores, paid medical collections do not affect the score at all after one year.

Ways to Manage Medical Bills and Credit Score Problems

If facing large medical bills here are some tips to minimize credit score damage.

• If possible, ask for a detailed medical bill and ensure all the charges are warranted. It is also capable of making mistakes, which may lead to overstatement of certain balances.
• If uninsured, attempt to haggle for lower prices and/or subsidies with individual medical service providers. Some may provide financial aid services or deferred payment plans.
• If unemployed or unable to afford a payment when the bill is due, then they may have larger discounts or charity care.
• Seek hospital or state financial aid or Medicaid wherever it is possible. These can help pay for medical expenses for people who meet specific income requirements.
• However, try to pay your bills on time and never let them go to the collection department if possible. If one cannot afford to pay the full balance, he or she should communicate with the providers as soon as possible.
• In case bills have been sent to collection agencies, it is important to discuss with the agency how to pay and ask for removal from credit reporting agencies once the debt has been paid.

The Bottom Line

Even medical bills can affect your credit, especially if they are sent to collections and reported to consumer reporting agencies. Even though the impact may not be as severe as with other debts, it can still adversely affect scores and the ability to secure approval for future credit.

One must act fast and get in touch with the providers to negotiate for a discount or find out if there is any financial help available in case one cannot afford the bill. This can help to prevent the bills from ever affecting your credit score in the first place. However, if some of the medical debts remain unpaid and receive the collections tag again, ensure you pay them as soon as possible when you can to reduce the impact on the credit score.

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