Why Are My Unpaid Medical Bills on My Credit Report?

Few people like going to the doctor and even fewer enjoy staying in the hospital. Even fewer enjoy getting the often-hefty bills that come along with medical services in the United States. However, unless you have excellent insurance – and sometimes, even then – these bills are unavoidable if you have serious medical issues or emergencies.  

What is even more frustrating is the fact that if these bills go unpaid, as they often must for the average working American, they end up negatively impacting your credit report. It can feel like a punishment just for getting injured or ill – and unpaid medical bills are one of the most common credit issues among Americans today.  

When and How Do Medical Bills Impact Your Credit?

First, it is important to note that receiving a medical bill won’t have any impact on your credit report. Only unpaid medical bills can do this. If you are able to manage your medical expenses, you should always prioritize doing so. 

However, once your medical bills go unpaid, your service provider may grow tired of pursuing payment from you directly and may sell the debt to a collection agency. Once this happens, the debt is likely to be reported against your credit score.  

Unfortunately, there is no official timeframe for how long your medical service provider will wait before handing your unpaid debt over to a collection agency. The industry standard is 90 days, but some providers only wait 60 days and others may wait as long as 180 day. There is no way to be certain of how long your provider will “hold” your debt, especially since they typically sell these debts to collection agencies in large batches rather than on a case-by-case basis.  

The good news is that the three major credit bureaus – Equifax, Experian, and TransUnion – now employ a 180-day standard across the industry for allowing unpaid medical debt to be reported against your credit. This uniform and extended period allows for more consumers to ills as necessary, as well as to have a better chance of paying those bills on time or create a manageable payment plan.  

How Long Can You Expect Unpaid Medical Bills to Impact Your Credit?

Sadly, even with the recent efforts to standardize the reporting timeline – and to give patients more time to pay these bills – there are still millions of people in America struggling with medical debt. It’s no wonder, then, that so many are also struggling with damaged credit as a result. If that describes you, you may be wondering how long you’ll be dealing with that damage.  

The standard length of stay on your credit report for these types of debts is seven years from the date of delinquency. This means that the time it lingers there will begin on the date that you passed the 180-day grace period allotted by the three major credit bureaus. It can also mean a serious problem improving your credit, since even with repayment, you will likely find that these debts linger on your report for a long time.  

This is especially true considering that your payment history – your record of repaying debts or paying bills on time – makes up a large overall percentage of your credit report. How large? Try 35% – over one-third! Given that fact, it’s no wonder why significant or numerous unpaid medical debts can spell disaster for someone’s credit.  

Even though adjustments have been made by all three major credit bureaus to make obtaining credit easier for those who are struggling under the weight of this debt, various banks and lenders use different models for determining your eligibility. Because of this, even those who repay their debts or who have outstanding debts in amounts under $100 may wrestle with negative impacts to their credit for years to come. 

Is There Anything That Can Be Done About Unpaid Medical Bills Impacting Your Credit?

Obviously, the best thing that can be done about unpaid medical bills that impact your credit report is to prevent them from happening in the first place. Unfortunately, preventing medical bills altogether is not only very difficult to do but also isn’t recommended, as routine medical care is very important. As such, those without insurance coverage that pays for the entirety of their medical expenses often find that accruing medical debt is a foregone conclusion – but managing that debt is something that can be done, with careful planning and even more careful budgeting.  

If you are just receiving your medical bills, you can call the hospital and inquire about an itemized expense report. This may actually reduce the amount you are charged for the exact same services. Likewise, you may be entitled to a reduced cost or manageable payment plan, simply by asking. The worst that could happen is that you’ll be told no, but at best, your costs will be reduced or spread out more manageably over time.  

Once you know exactly what you owe, create a budget plan for repaying the amount. Consider trimming unnecessary expenses while you pay down this balance and focus your funds on the task. Remember, it may not be fun to temporarily cut luxuries from your life, but maintaining your credit as a result is more than worth the effort! 

If none of these avenues are applicable to your scenario – or if your debt is too great to be managed, such as that accrued from major medical services or long hospital stays – dealing with the resulting dents to your credit may be your only option. Thankfully, there are some routes you can take to minimize the impact of these debts on your credit report and even speed up their removal. To learn more about these and begin your journey toward a better credit report, talk to the knowledgeable staff at the Van Horn Law Group. We can help you navigate the process of repairing your credit, advise you on how to keep from stumbling again, and guide you toward a better, brighter financial future.  

Don’t let a few nights in the hospital derail your family’s financial plans! If you’re dealing with potential negative impacts on your credit from outstanding medical expenses, give us a call at (954) 765-3166 – and let us see what we can do to help you today!