If you’re worried about medical bills, you’re not alone: About one in five Americans are facing past-due bills for emergency healthcare needs. When delinquent medical bills show up on your credit report, they can affect your credit score—adding to the stress of the debt.
Many people with medical bills are concerned about making payments and are also worried about the impact on their financial future. Do medical bills hurt your credit? Are they included on your credit report?
We’ll answer some frequently asked questions about how medical bills affect credit, plus share a few ways to get help with medical bills.
What is a credit report and why does it matter?
A credit report includes information about your credit history and current credit situation. It shows what type of loans you currently have or had in the past, and describes details like the loan type, amount and your payment history. Your credit report also includes details about any debts that are in collection, and if you’ve ever filed for bankruptcy or faced a foreclosure.
Your credit report is important because lenders rely on the information to decide if they will lend you money, how much, and under what terms. Insurance companies, landlords and employers can also check your credit report as part of their due diligence process.
There are three main credit reporting bureaus: Equifax, Experian and TransUnion. Lenders, credit card companies and other financial entities report information to these bureaus.
You are entitled to a free credit report from each of the three bureaus once each year. If you notice any errors or inaccuracies, it’s important to get it corrected as quickly as possible by contacting the credit bureau and following the dispute process.
Are all medical bills included on your credit report?
No, only certain medical bills are included on your credit report. Here’s how it works:
When you take out a new auto loan, for example, the lender will usually report the loan to the credit bureau within about 30 days, and it will then show up on your credit report along with information about whether or not you’re making on-time payments.
Medical bills are different. Medical debt typically shows up on your credit report only if it’s past due and is in collection, where the hospital or medical provider hires a third-party agency to collect the amount due. An account in collection is a significantly negative record on your credit report.
When do unpaid medical bills show up on your credit report?
Your hospital or health provider can send unpaid balances to collections whenever they want; however, major credit reporting bureaus have agreed to wait until medical debt is delinquent by at least 180 days before including it on your credit report. The waiting period is intended to provide you with extra time to resolve errors or negotiate with your insurance company.
How long do unpaid medical bills stay on your credit report?
If your insurance company ultimately pays the debt, the record will be deleted from your credit report.
If you personally pay off a medical bill in collection, the item on your report will be updated to reflect the “paid” status—but the record that you had an account in collection stays on your credit report for seven years. If you don’t pay off a medical bill in collection, that negative record will also drop off your credit report after seven years.
Even though both paid and unpaid collection accounts are subject to the seven-year recording period, it’s better to pay off your debt. Future lenders are likely to view a paid collection account more favorably than an unpaid collection account.
How can you get help with medical bills?
If you’re struggling with medical debt, there are several ways to get help, including government programs and financial aid from the hospital.
You can also consider a personal installment loan. With an installment loan, you can borrow a lump sum to wipe out your medical debts. You’ll pay back the borrowed amount and interest with regular payments (or installments) over a fixed period of time.
One notable benefit: making regular payments on an installment loan can boost your credit profile. Personal installment loans are available from banks, credit unions and also online.