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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

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Joshua Heckathorn's picture

Joshua Heckathorn is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past twenty years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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Robyn Fountain's picture

Here's my scenario: I received a bill from a hospital in October of 2011 that I knew was wrong. I immediately called them. They quickly agreed it was incorrect and told me not to pay anything until I received the corrected bill. (I had everything written down on my statements.) I received the FIRST corrected bill dated April 16, 2012. On May 1, 2012, I paid half the bill (443.00) On the 1st of June, I paid $100.00. I was out of town from the 28th (my husband gets paid only on the 1st) of June until the 9th of July. I returned home to a collection agency's letter. I still owed $300.00 at this point! I called them immediately to explain why my July payment had not arrived, and she told me it would ruin my credit score. She wanted me to charge the balance to my credit card. I refused. I was actually writing them a check THAT DAY for $100.00. She told me it would actually be $112.00, including their fee. I hung up and called the hospital directly. She told me to ignore the collection letter and to pay them the $100.00/month directly minus the 12.00 "fee'" She was very kind and understanding. My question is: since I received the collection letter in the first place, will it hurt my credit score?

Joshua Heckathorn's picture

It's possible that the collection agency could report your account to the credit bureaus, but they may not. I would verify with the hospital that they've pulled your account back from collections before making your final payments directly to them.