Medical bills can have a significant impact on your credit score, depending on how and when you pay them. Most healthcare providers won't report unpaid medical bills to credit bureaus until you're 60, 90, or even 120 days or more in arrears. If your medical debt is sent to a collection agency, it will appear on your credit report and affect your rating. A low credit score could mean a higher mortgage rate or prevent you from qualifying for a mortgage.
Paying an expensive medical bill with a credit card could also affect your credit utilization ratio, which measures the amount of available credit you're using and is an important factor in calculating your credit score. New ways for credit reporting agencies to report medical debt are reminiscent of other relatively recent changes in the credit reporting industry. The move will erase approximately 70% of negative comments on medical debt, which will give many a hopeful leap in their credit rating. The same survey indicated that one in four members of Generation Z and Millennials with medical debts skipped rent or mortgage payments because of their debt.
Paying your monthly credit card, car loan or mortgage bill on time seems like a much better comparison than paying a medical bill that may have been an isolated event involving a life-or-death situation (and possibly insurance confusion as well). If you can't pay your medical bill in full at once, your medical provider may be willing to set up a payment plan or reduce the amount owed if you contact them before you turn it over to a collection agency. Individuals and families must face a billing and collection system that can best be described as error-ridden, confusing and labyrinthine. By reviewing each medical bill and developing a payment plan with the health care provider, you can completely avoid the collection process.
So, theoretically, even after your past due medical bills are sent for collections, with the 180-day rule, you may be able to pay them before they appear on your credit reports. Unpaid medical bills may take a long time to appear on your credit report, but the damage to your credit score can last a long time once they do.