How Unpaid Medical Bills Affect Your Credit Score

Paying your medical bill is one of the last things on your mind when you’re at a hospital emergency room. And how that bill could affect your credit score is probably much less of a concern. But even a non-emergent hospital visit can result in a large medical bill months after your health insurance covers a portion of it. If you don’t pay the bill or pay it late, it can go to collections and hurt your credit score.

Here are some of the ways unpaid medical bills can hurt your credit:

Late Payments
An unpaid medical bill can end up on your credit report in a few ways. Your doctor’s office may report a late payment or unpaid bill to the three major credit bureaus. A large hospital may report the outstanding bill, but a small doctor’s office may not. If it goes to a collections agency, the debt will likely be placed on your credit report. The largest part of a credit score is payment history. It accounts for 35 percent of a score, and shows if you’ve paid past credit accounts on time or missed payments entirely.

Medical Debts Weigh Less
Medical debts have less of an impact on credit scores from the Fair Isaac Corporation, or FICO, which are the most widely used. Most lenders in the U.S. use an older version of the FICO credit scoring system which doesn’t pay much attention to the type or balance of a collection.

Under the old system, a small, unpaid medical bill could hurt a credit score just as much as a larger debt. The new scoring system protections don’t apply if you paid the medical bill with a credit card. If the credit card bill is paid late, your credit score could still be dinged.

Wait Seven Years
Legally, collections can only stay on a credit report for up to seven years. If you can wait that long, then the medical debt will go away and your credit score should gradually improve.

If you want your credit score to improve during those seven years, some lenders may want to see that you’re paying off collections that are less than seven years old. Others may not care and may continue denying you credit during that time. The more recent a collection is, the more it will hurt your FICO score.