Medical bills won't affect your credit as long as you pay them. However, medical debt is handled a little 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. On Friday, it was announced that comments on medical debt will be removed from millions of credit reports starting this summer.
The move will erase approximately 70% of negative comments on medical debt, which will give many a hopeful leap in their credit rating. A medical bill alone won't affect your credit. 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. The announcement comes at a time when federal regulators and consumer advocates are increasingly looking into the issue of medical debt, and the Consumer Financial Protection Bureau earlier this month criticized the national medical billing system for failed consumers. This means that if you paid your medical bill in full and the debt is still on your credit report as a negative mark, this negative mark will now be removed. The recent announcement by credit bureaus is a big sign for consumers who have paid off their medical debts, but who still suffer negative credit ratings.
Major credit reporting agencies are required to give you a 180-day waiting period after the bill is considered delinquent before including health-related collection accounts in your credit reports. If you think a bill was sent unfairly or prematurely for collection, ask your medical provider to return it so you can pay directly. The three major credit reporting agencies said they are making several changes to the way they handle medical debt. Select investigated the credit bureaus decision, what it means for consumers, and how to handle their current or past medical debt.
The three major credit bureaus, Experian, Equifax and TransUnion, treat medical debt differently from other types of delinquent accounts, and consumers have greater protection against health care bills weighing on their credit. According to Experian, the three major credit bureaus will eliminate a medical debt reported by a collection agency if it can prove that your health insurance company paid the bill. Some scoring models give less weight to outstanding medical debts than other types of collection accounts. 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.
Credit bureaus's new ways of reporting medical debt are reminiscent of other relatively recent changes in the credit reporting industry. 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. To help your score recover, the best thing you can do is to maintain consistent credit habits as much as you can, for example, pay your other bills on time and keep your credit card balances low.