Can Unpaid Medical Bills Bring Your Credit Down?
Filed under Credit
If you were wondering do unpaid medical bills make you have bad credit, then wonder no more. They do but the answer is not so simple. In the past unpaid medical bills were not counted toward your overall credit worthiness. It was overlooked by the reporting agencies and many medical facilities did not even bother to report a past due bill.
However, this has all changed. Hospitals, doctors and other private medical facilities are now perusing collection action with a vengeance. You will now find that your credit report will contain past due medical bills reported directly by the medical office or a collection agency.
How Much Does an Unpaid Medical Bill Hurt My Credit?
While these bills do not hold the same ramifications on your credit score, as does a past due credit card payment, they are still counted nonetheless. Excessive outstanding medical bills will quickly reduce your score and your ability to find financing in other areas.
The credit bureaus do not give a lot of point value to medical bills, but they do give some. Unpaid medical bills can bring your credit down. If you have excessive amounts of these medical bills it will hurt your score in two ways.
- One, you will quickly add up a lot of points for bad items, reducing your score.
- Second, you will have a large amount of bad entries listed on your report which will, in turn, reduce your score even further.
Some lenders are willing to overlook credit problems if it is found to be purely medical problems. This is because they realize that medical problems can and do occur due to no fault of the borrower. But this does not mean you should ignore them. Even small item medical debts can leave a flag on your account for up to 7 years.
Low credit scores can affect many areas of your personal and professional life. You will have a hard time receiving financing and may possibly be denied. You could be declined for employment or risk missing a promotion. Your insurance rates will rise, you will not meet the minimum requirements for an auto loan and you will be considered a high risk driver, regardless of your actual driving record.
How to Deal With and Pay Medical Bills
Medical bills can be a burden to pay. Everyone faces these problems in their daily lives. Try to establish a way to pay the bills payment on time to the best of your ability.
- Work with the hospitals – Hospitals know that if you have medical bills and are unable to pay, they will find some way to help you manage your expenses. Recouping some money back is better than gaining nothing.
- Create a payment plan – Mention a payment plan where you can pay a fixed fee every month. Make sure there are no additional interest and fees that are tacked on to the balance.
- Ask them to lower your bills – Going back to the idea that hospitals want some money paid instead of nothing, some are open to reducing your medical bills. Depending on the leniency of the hospital, they might cut your bill in half.
- Get an itemized list – Question all the expenses that were incurred down to the last pill. There should be no reason why you are paying more than retail price for a pill. Every single item that you used or they used on you should be accounted for with a price.
You do not want to be burdened with the bad credit score and everything that comes with that stigma, so find ways to handle that medical bill before it goes to collections and starts to hurt your credit. If you are in the situation where unpaid medical bills have already done damage, just remember that you can improve your credit in time.