Do Medical Bills Affect Your Credit?
Medical bills can be confusing and hard to understand. They can also be expensive and sometimes billed incorrectly.
After a medical emergency or treatment, you may receive a bill for the portion of the cost your insurance didn’t cover. You can choose to pay the debt at once or work out a payment plan. But, if you don’t make payments, the medical provider can send it to a collection agency. Once in collections, the medical debt can negatively impact your credit scores. A debt in collections can drop your credit score by up to 100 points, which can interfere with your ability to get loans or mortgages. It can also impact your ability to find a job or rent an apartment.
But the good news is that there are now changes to how medical debt is reported to credit bureaus. The three nationwide credit bureaus — Experian, Equifax, and TransUnion — now remove paid medical debt from consumers’ credit reports. They have also changed how they report medical debt in collections to consumers’ credit reports. This change comes in response to a report from the Consumer Financial Protection Bureau that found that medical debts often appear on credit reports due to factors outside of a person’s willingness or ability to pay. It could affect millions of Americans. Read more about these changes here.
How Do I Remove Medical Bills From My Credit Report?
While it is unfortunate that medical debt is such a common occurrence, recent changes help alleviate the negative impact that it can have on Americans’ credit scores. As of July 2022, the credit bureaus must wait a full year before adding unpaid medical collections to your report. This gives you a chance to dispute errors on your account with the provider, work out payment plans, and, in some cases, even get the bills removed from your report.
Medical bills are different than other types of debt, as they’re often unexpected and unavoidable. Unlike with a credit card, you don’t have the option to choose not to use one. In the past, that type of debt could negatively impact your credit score and make it difficult to obtain loans.
The best way to remove medical bills from your report is by paying them. However, it’s also important to recognize that a debt still remains on your record for up to seven years. So, if you’re unable to pay off your debts right away, take action to resolve them quickly to prevent further damage to your credit. That can include disputing erroneous charges, seeking financial assistance, or finding out if you are a victim of identity theft. These measures can reduce a medical bill’s impact on your credit score and improve your chances of getting credit in the future.
