A medical bill alone won't affect your credit. Unpaid medical bills can be sent to debt collectors, at which point they can appear on your credit reports and affect your score. A low credit score could mean a higher mortgage rate or prevent you from qualifying for a mortgage. .
However, medical debt is handled a little differently than other types of consumer debt. Because most healthcare providers don't file reports to credit bureaus, your debt would have to be sold to a collection agency before it appears on your credit report. Most medical providers won't sell the debt to a collection agency until you're 60, 90, or even 120 days or more late. Exactly when that happens depends on your healthcare provider.
Medical debt can ruin people's credit ratings and make it difficult to get a loan, mortgage, or credit card. People of color are the most affected by this problem, and programs designed to help are failing. Previously, even paid medical debts could appear on a report and have a negative impact on a credit score for up to 7 years. Even consumers who do a good job managing their money and sticking to a budget can end up with medical debt.
This year, three national credit agencies announced new policies to prevent unpaid medical bills from affecting people's credit ratings. If enacted, the law would require credit bureaus to grant consumers a 1-year grace period before including medical debt in credit reports. 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. So, medical bills won't affect your credit score right away if they aren't paid or if they are paid.
People still owe money for those bills, but the idea is to erase the black marks on their credit history so they can do things like get a car loan or qualify for an apartment. 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. In addition, medical debts often appear on consumers' credit reports once collection agencies have to participate. While most healthcare providers don't report your medical bills to a credit agency, they can send the debt to a collection agency if you haven't paid before the due date or haven't negotiated a repayment plan.
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. Make sure that you have been assigned the correct charges and that you have not been overcharged or billed more than once. The new law also prohibits balance billing, making you responsible for the rest of a surprise bill after your insurance company pays network charges. The above-mentioned change could actually prevent most consumers from being negatively affected by medical debt from a lending perspective.
These programs offer free, low-cost medical treatment, including emergency room services for people who can't afford to pay. Starting July 1, medical debts that were sent to collection agencies and that were eventually paid will have no place in consumers' credit reports. .
