Does Medical Debt Affect Your Credit Score?
Updated: Jul 28
Does medical debt affect your credit score? Learn how medical debt can impact your credit score and what you can do to manage it in this informative blog post.
Does Medical Debt Affect Your Credit Score?
When it comes to managing finances and keeping track of your credit score, there are a lot of factors to consider. One of those factors is medical debt. Many people wonder, "does medical debt affect your credit score?" The answer is yes, medical debt can affect your credit score, but the impact can vary depending on the situation.
Understanding Medical Debt
Medical debt is debt that is accrued through medical expenses. This can include hospital bills, doctor visits, prescriptions, and other medical-related expenses. Medical debt can accumulate quickly, and it can be overwhelming for individuals who do not have health insurance or have inadequate coverage. According to a report by the Consumer Financial Protection Bureau, approximately 43 million Americans have medical debt on their credit report.
How Medical Debt Affects Your Credit Score
Medical debt can have an impact on your credit score in several ways. If you are unable to pay your medical bills, they can be sent to collections. Once medical bills are in collections, they can stay on your credit report for up to seven years, even if you eventually pay them off.
Medical debt in collections can also lower your credit score. The amount of debt you have in collections, the length of time it has been in collections, and the date of the last activity all play a role in how much of an impact it has on your credit score.
It is important to note that the credit reporting agencies have made some changes to the way they report medical debt. In 2017, the three major credit reporting agencies (Experian, TransUnion, and Equifax) began a new policy to give consumers a grace period of 180 days before medical debt can appear on their credit report. This gives consumers time to work out payment arrangements with their healthcare provider or insurance company.
To avoid medical debt impacting your credit score, it is important to stay on top of your medical bills and communicate with your healthcare provider and insurance company. If you are unable to pay your medical bills, it is important to communicate with the collections agency and work out a payment plan.
Medical debt can have an impact on your credit score. If you have medical debt, it is important to understand how it can affect your credit score and take steps to manage it. By communicating with your healthcare provider, insurance company, and collections agency, you can work towards resolving your medical debt and protecting your credit score.
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