Maybe you received a surprise medical bill that’s far larger than you can afford to pay (you’re not alone, over 43 million Americans have overdue medical debt on their credit reports).

Or perhaps you didn’t even receive the bill from the hospital and all of a sudden it’s in collections (this scenario is unfortunately one that we deal with all the time).

Or you ignored the collections notices and now an unpaid medical debt is showing up on your credit report that you want to get rid of.

Even after reducing and paying your bill (we can help with that) – you still want to make sure that your credit isn’t hurt.

The good news is that it takes time before any unpaid medical debts can show up on your credit. And, even if it does show up on your credit – medical debts won’t hurt your credit score as much as other types of debts.

In this post we’ll dive into the details surrounding

  1. When exactly unpaid medical bills might show up on your credit report
  2. How those bills will affect your credit

When Will Hospital Bills Go On Your Credit Report

The good news is that even after getting sent to collections, it takes quite a while before an unpaid hospital bill can go on your credit report (though not forever).

While a hospital can technically report you to the big three credit reporting agencies immediately after your bill is due, most of them take a few extra steps before doing so.

Even better, those big three credit reporting agencies must wait at least 180 days before they can put an unpaid medical debt on your credit report. This rule is the result of a settlement between these three credit reporting agencies and the state of New York. So even if a medical debt gets reported to a credit bureau, if you pay it off within 6 months, nothing will show up on your credit report.

Let’s breakdown the typical steps that will happen before a bill gets sent to collections.

Bill Due Date – most hospital bills are due net 30 (that is, the due date of the bill is 30 days after receipt). Even hospital bills that claim “due upon receipt” won’t send you to collections immediately after sending you a bill – after all, they want to collect as much as possible and sending someone to a collections agency costs the hospital extra money.

‘In-House’ CollectionsUsually a hospital will spend anywhere from 1-6 months trying to collect on the bill with an ‘in-house’ collections agency (sometimes these can be separate companies contracted by the hospital to collect). Sometimes rather than collections, this time is spent for the hospital billing department to get its act together and send your account out to a different collections agency. Also, usually (though not always), the hospital won’t report the debt to a credit bureau (and even if they do, the 6 month waiting period mentioned above still applies). If this is a third party collections agency, they are required by law to send you a written validation notice within 5 days of first contacting you.

Third Party Collections – After ‘in-house’ collections, the hospital will send your bill to a third party collections agency. Many times they’ll sell the debt for pennies on the dollar. Here, the collections agency will almost certainly report your account to a credit agency – though as before, the 6 month mandatory waiting period before anything actually shows up on your credit still applies. Like with the above, the third party collections agency is required to send you a written validation notice within 5 days of first contacting you.

In sum – at a minimum, it takes 6 months from a bills due date before anything can show up on your credit report. Furthermore – in most instances it will take 9 months to a year before an unpaid bill shows up on your report. This should give you ample time to audit your bill for errors, ensure proper insurance coverage, and negotiate with the hospital.

However, 6-12 months is still a broad time frame. One way to be safe is assume that you have 6 months from the date on your first written validation notice to get everything settled.

How Medical Collections Affect Credit

However, despite your best efforts to get things figured out, something may pop up on your credit report surrounding medical debt.

There’s good news here, as well. FICO (the company that calculates the number for your credit score) recently released new standards that include removing any negative impact on your credit after paying off your medical debt in full. So – even if you have debt on your credit, it will be removed once you pay it off in full (or settle for a reduced payment amount with the debt collector so that they consider the debt ‘paid off in full’).

Even if you have unpaid debt on your credit, the new FICO standards differentiate between unpaid medical debt and unpaid non-medical debt. FICO scores are split into versions. FICO score 8 is the most commonly used FICO scoring. However, FICO 9 has recently been released and is starting to become more widely adopted. Perhaps in recognition of how convoluted and messed up the medical billing system is, FICO 9 weights unpaid medical collections less than other types of collections accounts.

That means that even if you have unpaid medical debt on your collections report – pretty soon it will count for significantly less than other types of debt in harming your credit score.

Finally – unpaid medical debt can only remain on your credit report for up to 7 years after the original delinquency.

Summary

  • You have at least 6 months from when a debt collector reaches out to you until anything will show up on your credit report (and in many instances even more time)
  • If you have a medical debt on your credit report, paying it off will remove it
  • New credit reporting standards are counting unpaid medical debt less than other types of unpaid debt
  • Unpaid medical debt is removed from your credit report after 7 years under all circumstances

6 Things To Look For When Buying Health Insurance

With open enrollment beginning on November 1st, millions of Americans will be looking for new healthcare plans. While it’s possible to buy good healthcare that’s not on the US Government’s healthcare exchange, we recommend buying healthcare on the ACA healthcare...

The Toxic Cycle of Healthcare Billing in 7 Facts

We all know that US healthcare costs are out of control - we spend over $10,000 per person for healthcare each year in the US. However - the current state of affairs creates a toxic and never-ending cycle that has an enormous effect on a shocking number of Americans....

Who Makes All The Money In Healthcare?

The US spends over $3.5 trillion annually on healthcare - (note that’s roughly the same as the entire federal budget) - or over $10,000 for every man, woman, and child in the US. Everyone from pundits to political candidates to advocacy groups takes alternating...

7 Steps to Take If You Have a Medical Bill in Collections

7 Steps to Take If You Have a Medical Bill in Collections Perhaps you’re getting hounded by a debt collector for a medical bill that’s the size of a house mortgage. They’re sending letters and calling. Perhaps they’ve even filed a court judgement or lien against you...

4 Warning Signs That You Have “Fake” Health Insurance

While nearly 30 million Americans don’t have health insurance of any kind (and that number is unfortunately rising), another 44 million Americans are underinsured. In fact, the Commonwealth Fund reports that in 2018, 45% of American Adults under 65 were uninsured or...

Top 5 Ways to Get Help With Your Medical Bills

Top 5 Ways to Get Help With Your Medical Bills Fighting hospital bills yourself can be scary, especially if you don’t know where to start. We’ve listed the top 5 ways to get help with paying (or fighting) your medical bills to ultimately lower the amount that you owe....

10 Key Health Insurance Terms To Know

10 Key Health Insurance Terms To Know Health insurance is confusing. Deductibles, co-pays, premiums - there’s a lot to learn and keep track of. Especially if you want to avoid buying insurance that doesn’t end up covering you when you need it most. Luckily, we’ve...

Balance Billing and Surprise Medical Bills

Intro You have insurance (and perhaps even a ‘Cadillac’ insurance plan) and go to a hospital or even a doctor to get treated for an illness. Maybe you even checked the hospital with your insurance company beforehand to make sure that it was ‘in-network’ and you were...

Going to the Emergency Room Without Insurance

Lack of insurance shouldn’t stop you from going to the emergency room if you have a true medical emergency. While you must be treated regardless of insurance coverage, financial status, citizenship, or otherwise - the cost for your care can add up extremely quickly if...