Can medical bills ruin your credit score?

Medical providers generally don't submit reports to credit bureaus. However, they could hand over unpaid medical debts to collection agencies and this could affect credit ratings. This year, a federal law banning certain types of unforeseen medical bills came into effect, and some states have reinforced medical debt protections by expanding Medicaid or holding nonprofit hospitals accountable for providing financial assistance to low-income patients. The FICO Score 9, the latest version of the FICO rating system that most lenders use to assess a consumer's creditworthiness, gives medical debt less weight than other liabilities.

Even if you have health insurance and the bill is for a covered expense, you may have to wait months for your insurance company to approve and issue the payment to the healthcare provider. Obviously, medical care is an important part of staying healthy, but expensive medical bills can cause your bank account to suffer. Therefore, medical bills won't affect your credit score right away if they aren't paid or if they are paid. North Carolina hasn't expanded Medicaid, so despite his low income, Wingard, who is 58 and has no young children, doesn't qualify for his state's public insurance program.

According to the KFF survey, nearly 20% of Americans with medical debts don't think they'll ever pay them all off. In August, VantageScore, a company that calculates credit ratings, announced that it would stop using medical charges in its formula. Unlike the decision to, for example, buy a home or make a major purchase with a credit card, medical expenses usually arise from circumstances that the consumer does not control. If two candidates are equally qualified but one has low credit or several unpaid debts, employers may consider that person to be less responsible, he says, despite research showing that medical debt is not an accurate indicator of a person's likelihood of paying bills.

It's not just about cancer care, but also about the bills for unrelated health problems that developed in the following years. Unpaid medical bills can take a long time to show up on your credit report, but the damage to your credit score can last a long time once they do. Unpaid medical bills can remain on your credit report for seven years after your late payment, however, once paid, they will be removed from your report. For example, you may need records from the collection agency, insurance company or healthcare provider, copies of canceled checks, or a credit card statement showing that the bill has been paid.

Because 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. If you have medical charges on your credit report that aren't accurate or are the result of fraud, you can challenge them with the credit bureaus.

Alison Valentine
Alison Valentine

Friendly bacon nerd. Lifelong twitter lover. Amateur music advocate. Unapologetic musicaholic. Total twitter practitioner.

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