Can unpaid medical bills affect credit score?
Unpaid medical bills affect credit score if reported to the credit bureaus. But unlike loans that your lender can easily report any unpaid amount that is due to the credit bureaus, your health provider does not have that direct relationship with the credit rating agencies.
Medical bills can remain unpaid for some reasons. It may be that you were not aware of the bills. This situation usually happens when a person has moved from where he used to live to another location. If you have changed address and you did not inform your health provider about your new address on time, it is possible your medicals bills will still be sent to the old address.
Unfortunately, you may be unaware of this until the bills have been sent to collection. Another reason why medical bills can remain unpaid is when you don’t have enough health insurance coverage and you lack cash to pay the entire bills. You will agree with me that medical care is actually very expensive. One medical bill can be in the range of ten thousand dollars. Except you have enough money saved in your emergence savings account, your budget may not be able to accommodate the bill.
So, how do medical bill affect credit score? Your health provider cannot send the information about the unpaid medical bills to the credit bureaus. Instead, the debt will be sent to collection. It is through the collection agency that the credit bureaus will get to know about the unpaid medical bills.
This notwithstanding, your unpaid medical bill cannot appear on your credit report until after 180 days has elapsed beginning from the date you have been delinquent. At least, this provides consumers ample time to make arrangement for the payment of the bill. If you expect health insurance provider to pay the bill, you can quickly communicate them so that they clear the bill for you.
However, if it is your responsibility to pay the medical bill, you should contact your medical provider or the collection agency to negotiate how best you will be able to pay the bills. If the amount is so much that you will not be able to pay at once, you can negotiate to pay in instalments. You can also decide to raise money from friends and relatives to quickly pay off the medical debts instead of allowing the unpaid bills to appear in your credit report.
Once the bill hits your credit report, your credit score will drop. It does not matter if it is your health insurance provider that is responsible for the payment of the bill, it will still have the same negative effect on your credit score if the unpaid bill is listed in your credit report.
However, if the insurance provider later pays the bills, you can approach credit bureaus to remove the debts from your credit report. But this will require that you provide the proof of payment by the insurance provider. If you are the one that paid the bills yourself after the debts have appeared in your credit report, you will not be able to remove it that way.
Nevertheless, you can negotiate with your medical provider or the collection agency to help you delete it from your credit report. Please note that they are not obliged to do this. Therefore, you should know how to approach them as you will be requesting for a favour.
How long do medical bills stay on your credit report?
Once you allow medical bills to appear on your credit score, it will stay there for seven years except it is removed based on the conditions discussed above. The effects that this will have on you will depend on the person reviewing your credit report.
Some organization may not place much emphasis on unpaid medical bills as they will do for other debts. But the truth is that, your credit score will drop by around 50 points if your unpaid medical bills are reported to the credit bureaus. Therefore, instead of waiting for the 180 days of grace to elapse, you can pay the medical bills with your credit card. Paying the bills with credit card will provide you more time to sort out your finance.