Healthcare is that part of our lives that costs us both ways, whether we take it seriously or not. If you are not taking it seriously, it can cost you your life, and if you are taking it seriously, it can cost you money, sometimes a lot of it.
From routine check-ups to unexpected emergencies, healthcare costs can quickly pile up, leaving you wondering about the potential consequences on their financial well-being. So in today’s blog, we will discuss whether medical bills affect your credit and, if yes, what significant impact they can have on your credit history.
Behind the scenes of medical debt comes your credit score. A score that can have a significant impact on your financial future. While medical bills cannot directly damage your credit score, settling those bills can indirectly influence your good credit score.
Do Medical Bills Affect Your Credit Score?
When it comes to medical bills, their impact on your credit score depends on how they are handled. Generally, if you pay your medical bills on time, they won’t affect your credit score. However, if you fail to make timely payments and your debt is sent to a collection agency, it may eventually impact your credit.
Unlike other types of consumer debt, medical bills are not typically reported directly to the credit bureaus. Three main consumer credit bureaus in the US are:
- Experian
- Equifax
- TransUnion.
All three of them give you a time of 365 days to pay any medical debt before it appears in your credit history. This means that simply having an outstanding medical bill or debt will not immediately result in it appearing on your credit report.
For a medical debt to appear on your credit report, it must be sold to a collection agency, and the collection agency then has to report it to the credit bureaus. This process usually takes a lot of time, and there is usually a waiting period. If you manage to resolve the debt within this period, it may never show up on your credit report.
It’s important to note that while medical bills may not have an immediate impact on your credit score if they end up on your credit report, they can have a huge negative effect.
Unpaid or late-paid medical debt can lower your credit score and make it very difficult for you to obtain credit in the future. Therefore, it’s advisable to stay on top of your medical bills and make timely payments to avoid any potential negative impact on your credit score.
If you’re struggling to pay your medical bills, it’s a good idea to communicate with your healthcare provider or the billing department to explore possible payment options or financial assistance programs that may be available.
Is It Possible to Remove Medical Bills from Credit History?
When it comes to medical bills on your credit history, it is possible to remove them under certain circumstances. If you believe that the medical bills on your credit report are added wrongly or the result of fraud, you have the right to dispute them with the credit bureaus.
To begin the process, you will need to contact each of the major credit bureaus (Equifax, Experian, and TransUnion) individually. Disputes should be filed separately with each bureau by clearly mentioning all the details that you found incorrect. The credit bureaus don’t charge a fee for filing disputes, and you can usually initiate the process online.
When disputing medical bills, it’s important to provide any supporting documentation or evidence that proves the inaccuracies or fraudulent nature of the collections. This may include correspondence with the medical provider, receipts, billing statements, or any other relevant information that can support your claim.
Once the credit bureaus receive your dispute, they are legally obligated to investigate the matter. They will typically contact the entity that reported the medical collections, which could be a hospital, doctor’s office, or collection agency.
If the entity fails to provide sufficient evidence or fails to respond within the given timeframe, the credit bureaus must remove the disputed medical bills from your credit history. This means the negative impact of those collections on your credit score will be eliminated.
However, if the entity verifies the accuracy of the collections or provides evidence supporting its claim, the credit bureaus will maintain the information on your credit report.
Will My Credit Score Improve When I Pay Off Medical Debt?
Yes, paying off medical debt leads to improvement in your credit score. Unpaid medical collection accounts with an amount of more than $500 can negatively impact your credit scores for up to seven years.
However, when you or your insurance company settle a medical bill that was in collections and report the payment to the credit bureaus, the account will be removed from your credit reports, making your credit score better!
Frequently Asked Questions (FAQs)
Do medical bills affect your credit score even if you pay them on time?
If you pay your medical bills on time and in full, then they won’t negatively impact your credit score. However, if there are inaccuracies in your credit report, it’s important to dispute the information and get it corrected immediately.
Are there any alternatives to paying medical bills upfront?
The answer is yes! There are healthcare providers that offer financial assistance programs or payment plans for those who can’t pay their medical bills upfront. Moreover, you can consider getting a medical credit card or personal loans specified for medical expenses.
Can you negotiate medical bills to avoid credit score impact?
Yes, you can negotiate medical bills with healthcare providers, as many providers are open to discussing payment plans or reducing the total amount owed. However, it’s important to communicate with them and explain your financial situation to find a solution that mutually benefits both parties.
