Unpaid medical bills are a funny thing when it comes to your credit. Not every unpaid bill will negatively impact your credit, but if you let them go long enough, your score could suffer. Knowing exactly how and when you should get your medical bills paid can help you prevent your credit score from suffering too much.
What does Unpaid Medical Bills Mean?
The first thing to understand is what unpaid medical bills really are and what they are not. If you do not pay for your services right when you receive them, they are not considered “unpaid.” What is considered unpaid are the services that you receive a bill for after the fact and that you do not pay for on time. Typically, most practices will give you 30 days to get the bill paid. After that 31st day, your bill is considered past due or unpaid.
How Long can a Medical Bill go Unpaid?
Medical bills can go unpaid forever if you let them, but eventually, they will catch up to you. Most practices hold onto unpaid medical bills until they are more than 90-days past due. At that point, the practice sells the debt over to an agency that specializes in collecting money from people that do not pay their bills. At this point, your credit will more than likely be affected.
Medical Practices do not Report to the Bureaus
Not every single debt that you incur will get reported to the credit bureaus. The most common debts that do get reported are mortgages, car loans, student loans, and credit card debt. There are a few others that might report, but they are not as common. For example, some utility companies report payments but only after an account becomes 30-days past due. Medical practices are among the companies that do not report to the bureaus, which means even if your bill does go 30 or 60-days past due, your credit will not be affected.
Collection Agencies do Report to the Bureaus
Collection agencies operate differently than medical practices as they do report to the credit bureaus. This type of debt works a little differently too. In most cases, such as for a credit card, your payment is considered on time until you are more than 30-days past due. At that point, your credit score will be negatively impacted. With a collection, however, the moment that collection hits your credit report, your credit score is negatively impacted. The longer the collection sits there unpaid, the more it affects your credit.
How Much the Unpaid Medical Collections Affect your Score
What everyone wants to know is just how much their credit score will be affected by unpaid medical collections. There is no surefire answer to this question, though. It depends on a variety of factors including how large the collection is, how past due it is, and what you do about it. If you pay it off right away, your credit score will not have time to get too negatively affected. On the other hand, if it sits there for several years, it could continue to bring your score down.
How to Pick your Score Back Up
If you have unpaid medical bills that you cannot pay right now, you should focus on the remainder of your credit in order to keep your score up. If you have multiple accounts that are reporting late, then your score will be affected even more. Instead, make your regular payments on time and avoid extending your available credit too far. When you are able to make a payment arrangement or pay your collection in full, it is recommended so that you can start bringing your credit score back up.
The long and short answer regarding how unpaid medical bills affect your credit score is that it depends. The credit score is a mixture of many different pieces, each of which gives an entire picture of your financial health. One medical collection typically does not seriously impact your credit score, but multiple collections and late payments could seriously hinder your credit score for quite a while. The best thing to do is be honest with the company that you cannot pay and see what type of arrangements you can work out to avoid affecting your credit score.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.