Medical bills are the leading cause of bankruptcy according to many financial sources. Unfortunately, many people neglect their medical bills without realizing the impact that those unpaid bills could have on their credit score.

How Medical Bills Can Hurt Your Credit

After you receive medical services, your physician or hospital will bill you for any portion that wasn’t covered by insurance. Just like any other bill, medical bills have a due date. If you don’t pay by the due date, your bill becomes past due. Hospitals will only send you so many past due notices before they give your account to a third-party debt collector to resume collection efforts

When the debt collector receives your medical bill, one of the first things it will do is report the account to one or all of the three major credit bureaus (Equifax, Experian, and TransUnion). The medical collection account is considered a serious delinquency and can remain on your credit report for up to seven years, the maximum amount of time permitted by law.

Your credit score – the number creditors and lenders often use to approve your applications for new loans and credit is based solely on information that’s in your credit report. Since having a collection account on your credit report indicates you have a seriously delinquency in your credit history, your credit score will drop when a new collection is added to your credit report. The more medical collections accounts you have, the lower your credit score will be.

Protect Your Credit from Medical Bills

One of the easiest ways to keep medical bills from impacting your credit score is to pay your bills when you receive them. If you can’t afford to make payment in full, contact the hospital’s billing department to make payment arrangements.

Even if you have health insurance, don’t assume that your insurance company will always handle bills in a timely manner. If you receive a bill that should have been covered by insurance, contact your insurance company to find out why the bill wasn’t paid. It could have been a simple oversight by hospital billing or the insurance claims department. Insurance companies often cover only a certain percentage of medical bills, so you might be responsible for some portion of medical debt after the insurance company has covered its part.

To find out whether you have unpaid medical bills out there, check your credit report.

To be doubly safe, you might contact the hospital or physician’s billing department to check the status of your account, especially if you’ve received any medical services within the past year. Sometimes, just because the medical bills aren’t on your credit report doesn’t mean they don’t exist. By contacting the medical provider, you’ll know for sure whether you have outstanding medical bills that could end up hurting your credit.

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2 Responses

  1. With the ever increasing downward spiral of the healthcare system and the associated costs, this is good information to have. I have struggled with medical bills in the past. For many, it seems easier to forget about them than to do anything else. When life throws you a curve ball where is it that you turn to for help. Some declare bankruptcy. As mentioned, some simply forget about them. Some eek by, with little left over for anything else in an attempt to pay them off. In any of those cases it is a burden that can be difficult to bare. Many that I work with in my line of business have credit issues. I am glad that I have a reputable company to turn to that is able to help them with this burden.

    1. Thanks Jerrad for your comments. Yeah this whole health care thing is a major issue tons of consumers and not sure its going to get any better. There is some legislation that is being considered that could lessen the impact of medical bill on credit score but until that happens we need to not ignore it and try our best to stay on top of it.

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