Can Medical Debt Hurt My Credit Scores?
YES! Unpaid medical debts can most definitely hurt your credit scores. Paying your medical bills on time and in full, however, will do nothing to improve them. Doesn't sound fair to the consumer now, does it?
Well, it isn't, and lawmakers have even looked at legislation in the past which was written with the intention to wipe consumers' credit reports clean of "paid" medical debts that were delinquent at one point in time. The bill unfortunately never passed the House, so the issue remains unresolved.
Unpaid medical debts, just like unpaid credit card debt or any other unpaid loan, will continue to hurt your credit scores when they show up on your credit reports.
But, there is one key difference you should keep mind. Unlike what would happen with your credit cards, auto loan, or mortgage if you fell behind on payments, an unpaid medical debt will not show up on your credit reports until it's actually turned over to collections. Prior to that taking place, you may receive a 30-day late or 60-day late notice from the medical provider, but they will not report you as "late" to the credit reporting agencies. Get behind on your credit card by 60 days though, and there's a very strong chance you'll end up with a bunch of late pays (30, 60, and 90-day lates) on your credit report and an immediate hit to your FICO scores.
For someone with a good credit score in the upper 700s, that hit could even be more than 100 points! I've never missed a credit card payment in my life, but I must admit that I rarely pay medical bills by their initial due dates. In fact, I often take an extra 30 to 60 days before I get around to taking care of payment in full. That way, I keep the cash in my bank account a bit longer, yet no harm is done to my credit scores.
What's important is making sure you take care of payment in full well before your account could be handed over to a collection agency, which often happens around the 90-day mark. Shoot for the 60-day mark like I do, and you should never run into a problem. Or, just pay the medical bill in full when you receive it and then get on with your life. It's not like holding onto the cash for an extra few months is going to earn you much in return these days.
Have you ever had someone try to convince you that an unpaid medical debt won't affect your credit scores? If so, we'd love to hear your story in the comment section below. Photo by Alex Proimos