How Does Slow or Non-Payment of Medical Bills Affect Your Credit?

Medical bills are a fact of American life. Whether you have insurance or not, the high cost of medical care means that most of us will eventually rack up medical bills that are difficult or impossible to pay. But if you are slow to pay medical bills, or do not pay at all, you may find your credit will suffer.

Reporting to Credit Bureaus

Whether your credit will be affected by unpaid medical bills depends upon whether your medical provider reports to credit bureaus. Chances are the provider does, which means that nonpayment shows up on your credit report, sooner rather than later. And even if the provider does not report to credit bureaus, they likely work with a billing or collection agency that does, which means that it is almost inevitable that nonpayment or slow payment of a medical bill will damage your credit.

Slow Payment

If you are slow to pay your medical bills, your credit may suffer not one, but two negative entries: initial nonpayment to the medical provider, and the medical provider's subsequent shuffling of your unpaid account to a collection agency. It may seem like double-dipping, but your credit report will show both incidences; first, your medical provider report failure to pay the bill, then the collection agency reports the amount owed. Both entries are recorded on your credit report, and the combination will reduce your credit score. While you can improve your score by paying the collection agency, the damage is done.

Nonpayment

It's unlikely that if you do not pay a medical bill, the only entity that will report this knowledge to the credit bureaus is the medical provider. When the account is turned over to a collection agency, the collection agency continues to report that you are not paying on the account. The agency can continue to report this until they charge off the debt, or report it as unrecoverable. What often happens, however, is that the debt is sold to yet another collection agency, which begins the process all over, and enters another negative item on your credit report.

Undoing Damage

The best way to avoid the damage unpaid medical bills can do to your credit is to make some kind of payment arrangement with the medical provider as soon as you receive a bill. Many providers offer a discount for cash payment, or will offer you an affordable payment arrangement.