Can Hospital Bills Go on Your Credit Report?

Even if you are insured, an unexpected trip to the hospital can leave you responsible for steep hospital bills. Unfortunately, ignoring your medical debts can not only damage your credit rating, it can leave you subject to a lawsuit from the hospital or collection agency that purchases your account.

Facts

Unlike credit card companies or mortgage lenders, hospitals do not report the debts you incur to the credit bureaus. Thus, your initial hospital debt will not appear on your credit report. Pay it off quickly and you can prevent credit damage from occurring.

If you fail to pay your hospital debt, the hospital will turn your account over to a collection agency. Most collection agencies report consumer debts to the credit bureaus. Your unpaid hospital debt will then show up on your credit report as a collection account. Collection accounts are derogatory and hurt your credit score.

Features

According to the New York Neighborhood Economic Development Advocacy Project, hospitals typically turn debts over to collection agencies more quickly than other creditors. Credit card companies, for example, wait an average of 180 days before charging off and selling unpaid debts. A hospital, however, may only wait 30 days before turning your account over to a collection agency. Hospital policies regarding when unpaid accounts go to collections differ depending on the hospital.

Time Frame

Once a collection account appears on your credit report, the Fair Credit Reporting Act notes that it can remain there for seven years from the date your original debt became 180 days delinquent. For example, if your hospital visit occurred in May 2010, the standard seven-year reporting period would not begin until November of the same year. The credit bureaus would then remove the collection account in November 2017.

Warning

If the collection agency decides to sue you for your medical debt and wins a court judgment against you, the court judgment will remain on your credit report for seven years from the date the judgment was awarded -- marring your credit rating for much longer than the original collection account. In addition, if you file bankruptcy to avoid paying overwhelming medical bills, the bankruptcy can remain a part of your credit record for up to 10 years from the date you filed your case.

Considerations

MSN Money notes that, unlike many other forms of unpaid debt, unpaid medical bills on your credit report do not necessarily indicate that you present a greater risk to lenders. Because you did not intentionally incur the debt and then leave it unpaid, such as with a credit card debt, not all lenders view medical collection accounts as a red flag suggesting that you pose a higher than normal financial risk to the company.