How Medical Debt Hurts Your Credit Score
Unexpected and expensive medical bills can follow an illness or injury. A high bill balance due signals your attention, especially once your insurance coverage is processed. When these medical bill balances go unpaid for too long, they get documented in your credit report and calculated into your credit score with other credit data.
Medical debt can negatively affect your credit score, and quite possibly for years, according to Nerdwallet. A drop in your credit score can mean losing your capability to get an auto loan, refinance a mortgage, or get 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 and generally ranges between 300-850. FICO is among the most common credit scores.
Tips to Safeguard Your Credit Score
- Bankrate.com 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.
- Do your best to pay bills on time when services are performed, according to Forbes. While all late or unpaid bills merit your attention and should be paid on time, collections get weighted more heavily in calculating your credit score than late or unpaid bills, according to The New York Times. A collection agency will take over your medical debts beyond the due dates, and these debts will be noted in your credit report.
- If your bill has already gone to collections and a collection agency contacts you, offer to pay the bill promptly 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, says The New York Times. 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 been billed in error by a collection agency, you may 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.
Consider Financing Your Medical Bills with Crowdfunding
Sometimes it’s difficult to pay expensive medical bills within the requested timeframe. Ask your health care providers for options, whether bills may be negotiated, and pay as many bills on time as possible. Financing unpaid medical debt with a loan or savings may be possible but not ideal. Why not look into free compassionate crowdfunding for medical debt? Learn more about how to pay down your medical expenses and avoid any drop in your credit score.