Unpaid medical bills can be sent to debt collectors, at which point they can appear on your credit reports. Collections accounts can take up to seven years to submit your credit reports, although the impact on your credit score will diminish over time. Medical bills won't affect your credit as long as you pay them. However, medical debt is handled a little differently than other types of consumer debt.
Since most healthcare providers don't report to credit bureaus, your debt would have to be sold to a collection agency before it appears on your credit report. Most healthcare providers won't sell debt to a collection agency until you're 60, 90, or even 120 days or more in arrears. The exact time this happens depends on your healthcare provider. From now on, paid and unpaid debts for medical collections generally remain on your credit history for seven years after being reported.
If your medical bills are overwhelming, you may want to consider getting help from a medical billing advocate or financial assistance from a charity or government organization (more on that later). On July 1, paid medical charges will disappear from Equifax, Experian and TransUnion credit reports. If you think a bill was sent unfairly or prematurely for collection, ask your medical provider to return it so you can pay directly. According to credit bureaus, about 70 percent of medical debt will be removed from Americans' credit reports once the aforementioned changes take effect.
As part of the recently announced measures, Equifax, Experian and TransUnion will also extend the grace period granted to consumers to pay or organize a plan to cover medical debt. If you have medical charges on your credit report that are not accurate or are the result of fraud, you can challenge them with credit bureaus. In addition, unpaid medical bills will not appear on credit reports unless they have been in collections for at least one year (compared to the current six months). The move will erase approximately 70% of negative comments on medical debt, which will give many a hopeful leap in their credit rating.
Unpaid medical debts are usually released to a collection agency after 60 to 120 days of delinquency. If you're facing increasing medical expenses, there are a few things you may want to consider to avoid accumulating debt on medical bills. Especially if you have one of the types of medical debt that should go away on July 1, take note to review your credit reports on or shortly after that date. Even if you have health insurance and the bill is a covered expense, you may have to wait months for your insurance company to approve and issue the payment to the health care provider.
So, like any other collection account that appears on your credit reports, medical collection accounts can have a negative impact on your credit scores if left unaddressed. Credit bureaus treat you differently, but you are still responsible for canceling it (assuming the statute of limitations on the debt has not expired).