How Medical Debt Hurts Your Credit Score
Expensive medical bills follow any illness or injury. But paying these bills on time is sometimes not possible. So what happens to unpaid medical bills? When these medical bills go unpaid for too long, they get documented in your credit report and calculated into your credit score with other credit data.
Does medical debt affect your credit score? Yes, medical debt can negatively affect your credit score, and possibly for years, according to Nerdwallet.
A drop in your credit score can mean losing your ability to get an auto loan or a credit card. Here are some terms and tips to help you prevent your credit score from slipping with medical debts.
Two key terms to know are credit report and credit score. According to Cambridge Dictionary.
- A credit report is a document that contains a personal or corporate record of debt and payment of debt over a period of time.
- A credit score is a number assigned to a person that indicates to lenders their capacity to repay a loan. It is calculated based on a credit report. FICO is among the most common credit scores.
Tips to Keep Your Credit Score Safe
- Bankrate recommends you stay vigilant after receiving medical care. Depending on the medical provider, your claim could get forwarded to a debt collector anywhere between 90 to 120 days after you are billed. Keep track of the services and items you receive in the hospital and from doctors who treat you, who may send you separate bills.
- While all bills should be paid on time, collections get weighted more heavily in calculating your credit score than late or unpaid medical bills, according to The New York Times. A collection agency will take over your medical debts beyond the due dates. And they note these debts in your credit report.
- If your bill has already gone to collections and a collection agency contacts you, offer to pay the bill promptly. But only if the agency promises to have the bill removed from your credit report, reports The New York Times.
- It’s far easier to resolve a billing problem with a health care provider than with a collection agency. So talk with your providers and stay in touch about bills. You may be able to negotiate the balance or set up a payment schedule that works for you.
- The Consumer Financial Protection Bureau (CFPB) is a consumer finance government agency for people to take greater control of their economic lives. If you didn’t get a medical bill invoice or think you have a bill error, submit a complaint to CFPB and reference the collection agency directly on this website.
- Call your health provider or insurer if you have questions about a particular bill or item. If you decide to take some action before making a payment, for example, such as filing an appeal with your insurer, you should tell your doctor so that they don’t send the claim to collections, according to Bankrate.com.
Use Crowdfunding to Help Pay Your Unpaid Medical Bills
Sometimes it’s difficult to pay expensive medical bills on time. Ask your health care providers for options like whether you can negotiate your bills. Financing unpaid medical debt with a loan or savings may be possible, but not ideal.
Why not look into free crowdfunding for medical debt? Online fundraising can help you keep up with unpaid hospital bills and avoid any drop in your credit score. Or if you are seeking medical debt relief, consider using crowdfunding to get back on track.