Does Medical Debt Affect Your Credit Score?

Medical debt is different from other kinds of debt, because it is usually unplanned and uncontrollable. It is considered unsecured debt, like credit cards. Under certain circumstances, unpaid medical debt can negatively affect your credit score. However, with proper attention, you can help keep the debt from damaging your credit.

How It's Reported

Medical billing departments for hospitals and doctors' offices in the U.S. do not report to the three major credit reporting agencies. In fact, your medical bills may never appear on your credit report, as long as you pay them on time. If you become delinquent, hospitals and doctors' offices typically sell your account to a collection agency, which buy it for much less than the amount of the debt owed. If your medical debts go to a collection agency, they will show up as delinquent collections accounts on your credit report. This can drag your credit score down, even after you pay the debt.

What Hospitals Want

Hospitals want you, or your insurance company, to pay outstanding medical bills on time. While hospitals do not typically extend credit, it may be possible to work out payment arrangements if you have a good payment history with the provider. According to John Ulzheimer, president of consumer education at SmartCredit.com, hospitals are very quick to turn over delinquent accounts to collection agencies if the payments are consistently late.

Complications

If you have health insurance, chances are good that it should pay at least some of your medical bills. However, not all of your bills may be paid by your insurance, and even those that should be paid might not necessarily be paid on time. Accidents and errors do happen in medical billing, both on the part of hospitals and insurers. Even if an unpaid medical bill is the fault of your insurer, it is your credit score that the resulting delinquency puts at risk.

Solution

Keep yourself informed of all activity regarding your medical bills, including those that are sent to your insurer for payment. Talk to your hospital or doctor's office billing department, and arrange to get copies of all your bills. Check that your mailing address is current and up-to-date with your hospital, your doctor's office and your insurer. If you feel that your records are incomplete regarding your bills, make phone calls and speak to the billing department until you resolve your questions. Above all, pay all your medical bills on time, so your debt is never reflected on your credit report or score.