Do hospital bills affect your credit what you need to know

By Matt Mayerle
Modified on June 7, 2023
Do Hospital Bills Affect Your Credit

The simple answer is that hospital bills certainly can affect your credit. But don’t worry; just because you have a medical bill does not mean your credit will drop. There are several steps in between receiving a hospital bill and your credit lowering. And CreditNinja wants to help you understand those steps so you can avoid a low credit score. This article is for all the people wondering, “do hospital bills affect your credit?” Read on to learn more!

Most of us are familiar with what it’s like to receive a medical bill. They tend to be unwanted and unexpected financial burdens. But unfortunately for many Americans, they’re a regular part of life. It’s how we deal with these bills that can affect our financial lives for years to come.

If you have recently had an unexpected medical emergency and you’re wondering how you’ll deal with the bills that come with it, then this article was meant for you. Read on to learn more about medical bills, how they affect your credit, and how to pay them off.

What Is Medical Debt?

Medical debt is any debt that you owe from receiving medical care, services, or products.

Essentially, any time you go to the hospital, your primary care physician, or receive a prescription or care of any kind, you may incur medical bills. And if you don’t pay those bills immediately, they would then be considered medical debt.

Medical debt is just like any other type of debt. It’s crucial to pay it off as soon as possible to get out of control. Any debt has the potential to lower your credit score. This is why it’s so important to take care of it immediately.

If you have health insurance, it can help to curb some of the costs of medical care. But even having health insurance doesn’t guarantee that you won’t have medical debt. There are some things that your health insurance company will pay for and some that they won’t.

Make sure you familiarize yourself with what type of medical bills are covered through your insurance company. That way, you’ll know what to expect when receiving medical care.

What Happens To Unpaid Medical Bills?

Many patients today are left wondering what happens to their unpaid medical bills. An unpaid medical bill is just like any other unpaid bill. But, unfortunately, it can eventually show up on your credit reports and even lower your overall credit scores.

The process for medical bills is as follows:
  • You have an unexpected medical emergency and need immediate care.
  • You go to an urgent care center or emergency room at a hospital.
  • They provide the care you need and send you on your way.
  • They might require you to pay a co-pay on the spot.
  • After a little while, you may receive a bill in the mail for the care you received.
  • If you have health insurance, they may have already paid their share, and you owe what’s left. If you don’t, then you owe the total amount to the medical providers.
  • You’re required to pay the hospital or facility directly for the bill you receive.
  • The facility will contact you to collect payment until you send the money.
  • After a set amount of time without payment (anywhere from 60–180 days depending on the specific hospital or facility), the medical provider will turn your debt over to a collection agency.
  • The hospital sells your debt to the agency, and now they will begin to reach out to you to collect payment.
  • If you have a debt in collections, your credit score will likely drop significantly.
  • Eventually, the collections company may try to sue you and garnish your wages to collect the amount.

Will a Medical Bill Affect Your Credit Score?

As you can probably guess from the information above, the answer to this is yes. A medical bill can ultimately lower your credit score if you don’t pay it and it moves to a medical collections company.

By not paying your medical bills, you’re ensuring that those debts will end up on your credit report. And having a debt in collections on your credit report will lower your overall credit scores. When lenders, landlords, and even employers see medical collections in your credit history, it tells them you may not manage your money well.

Not only will these collection accounts show up on your credit report and lower your credit scores, but they may end up taking money out of your paychecks.

If your medical expenses aren’t paid and they move over to a collection account, it’s crucial to pay them immediately. In addition to this debt being reported to the credit bureaus, the collection agency will eventually try to garnish your wages. This is the most damaging way that medical bills affect people.

Wage garnishment means that you’ve failed to settle the collection account, and the company will try to sue you and pull money directly from your paychecks. If they succeed, a portion of each of your paychecks will go straight to the collection company to settle the unpaid Medical debt.

To avoid your credit scores dropping and wage garnishment, it’s essential to settle your unpaid medical bills right away.

How To Pay Unexpected Hospital Bills

There are several ways to pay down your medical bills to avoid negative marks on your credit reports and credit history. Read on to learn how most people pay for medical care today.

If you have any cash left over after budgeting for the month, then that money should go toward settling your medical bills. Your credit report and your future paychecks will thank you. It may not be fun to put your extra cash toward a medical bill, but it’s a wise financial move.

If you don’t have leftover money at the end of the month for medical bills, then you may be wondering how to pay your medical debt. Fortunately, there are still options out there for you.

Personal Loans for Medical Bills

Many people who are struggling with paying off medical bills turn to personal loans. If you find the right personal loan, it can be an excellent way to pay off your medical costs and avoid having them show up on your credit report.

There are a lot of personal loans out there that can be used to pay off medical bills. But you’ll need to make sure that you’re using a trustworthy loan and lender. If you can get a bank or credit union loan, then those are usually safe and affordable.

But many banks and credit unions will require their borrowers to have a decent credit report to receive a loan. So if your payment history and credit score are less than ideal, you may not get approved. In this situation, many borrowers turn to personal installment loans.

These loans are designed for borrowers with less-than-perfect credit scores. They also tend to offer a flexible payment plan that allows borrowers to repay the loan over a longer time. This can make your payment plan more manageable. You can even apply for an installment loan online.

Just remember to do thorough research no matter what type of loan or lender you’re considering.

Borrow From Friends or Family

Borrowing money from a friend or family member can be a good option if you can’t get approved for an affordable personal loan.

If you know someone who can help you out, they may not even charge you interest. This may be a great option to pay your medical debt. The only caveat is that sometimes money can affect personal relationships in a negative way.

If you’re worried that borrowing money may strain your relationship, then it may be best to avoid this option. But if this won’t be an issue, then accepting help from a loved one can be a great way to settle your debts.

Just remember to set up a contract and a payment plan, so everything is in writing.

Negotiate With the Health Care Provider

You may be surprised to learn that many hospitals and medical facilities are willing to lower your overall medical bills if you ask.

Calling the health care provider and speaking to the person in charge of billing can help significantly. Be kind and polite, and explain your situation. Let them know that there’s no way you can afford to pay the bills in full. Ask them if they can cut your bills in half. They may not be willing to lower them by that much, but many hospitals will reduce them at least a little bit.

You’d be amazed how much money you can save by simply explaining your situation and asking them to help you out. After all, you have nothing to lose.

In Conclusion

Medical bills affect many other parts of your financial life. For example, if left unpaid, they get reported to the credit bureaus, show up on your credit report, and may lead to medical collection accounts and wage garnishment. And the effects of having a bad credit score could last for years.

One of the best ways to avoid massive amounts of medical debt is to pick a good insurance company and sign up for a health plan. This can drastically reduce how much you’ll owe to a hospital if you receive care.

It’s crucial to remember that leaving these bills unpaid means that your credit scores with the major credit scoring agencies will eventually lower. Avoid this by paying them off as soon as you possibly can. Negotiate with the facility for a lower bill and do what you can to pay it quickly.

You should also remember that if you see a bill in collections that you don’t believe is yours; it may be a mistake. Unfortunately, errors in your credit report do happen. If a collections agency is contacting you about a hefty medical bill that isn’t yours, you can reach out to the consumer financial protection bureau.

The credit scoring model can be affected by many things, and if your report from a credit bureau is showing collections, your score will likely be lower. Remember that paying these bills when you receive them is the best thing to avoid financial repercussions later.

How to Deal With Medical Bills on Your Credit Report
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