Unpaid medical bills are likely to appear on your credit report -- if the doctor or medical facility turns the account over to a debt collection company. Collection agencies place negative information on your credit report in an attempt to get you to pay. Once posted, the information can remain on your report for up to seven years and hurt your chances of receiving new credit at the lowest interest rates.
The Billing Process
Medical providers submit bills to health insurance companies after treatment. In some cases, you can make payment arrangements if you are uninsured. The insurance company makes a determination on paying the bill based on your policy. The company may pay all or a portion of the claim, leaving you responsible for the rest. The doctor or health facility will bill you directly for any remaining portion.
Timetable
It could take several months for unpaid medical bills to show up on your credit report. The timing varies depending on how quickly the bills are processed and how aggressive your doctor or medical facility is in collecting outstanding debt from patients.
Payment Plans
Most doctors and medical facilities accept payment plans on balances not covered by insurance. Payment plans are also possible for people who are uninsured. The medical debts generally aren't a problem as long as you continue making payments as promised. However, if you stop making payments, the doctor or medical facility may turn the bill over to a debt collection company.
Debt Collection
Debt collectors are paid only if they collect from you, and that is the main reason they place information on your credit report indicating that you have defaulted on medical debt. The purpose of the listing is to get your attention and entice you to pay. The debt collectors know that the information could lower your credit score or keep you from being approved for a home mortgage.
Resolving the Issue
Some debt collectors will remove negative credit information from credit reports if you agree to pay in full -- a process called "pay for delete." However, the debt collector is not required to do so, and the information can remain on your credit report for seven years. Once you resolve the balance, your credit report will be updated to show that you paid off the delinquent medical debt. That could be enough to end any problem with being approved for credit as long as the rest of your credit report is satisfactory.
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