Like any debt, unpaid medical bills can hurt your credit rating and restrict your ability to borrow, buy property or get a job. Medical debt carries a particular risk: The most important factor in credit scoring is payment history — essentially, how regularly you pay bills on time. If you hold off paying large health care bills due to lengthy negotiations with providers and insurers, you might see your credit tarnished as a result.
Medical debt does not affect your credit score unless it’s reported to a credit bureau, and virtually no hospital or medical provider will report the debt directly, according to the National Consumer Law Center (NCLC). However, they might turn it over to a collection agency, which might report it. In a 2018 Consumer Reports survey of adults who had recently faced a large health care expense, nearly 30 percent said the bill had ended up with a collection agency. You might not even realize you’re delinquent until you hear from the collector.
Greater protections for consumers
The good news, relatively speaking, is that not all debt is created equal. The three major credit bureaus — Experian, Equifax and TransUnion — treat medical debt differently than other types of delinquent accounts, and consumers have greater protection against health care bills weighing down their credit. Key distinctions:
- Waiting period. The credit bureaus must wait 180 days before listing medical debt reported to them on your credit report. The grace period allows time to resolve disputes with medical providers or insurance companies before a bill is considered overdue and affects your credit score.
- Medical debt removal. Most collection accounts remain on your credit report for at least seven years, regardless of when or how the debt is repaid. Medical debt, however, is expunged if it has been paid or is being paid by insurance.