How are medical bills treated when applying for credit?

Your Credit Minute Show Notes:


  • 00:00                                   Hey what’s up guys? I’ve got a great question today out of Detroit, Michigan. How does, or how are, medical bills treated when applying for credit?
  • 00:10                                   So let’s give you the example of buying a home, okay? Um, you saved up some money for a down payment, you walk into the bank, you want to apply for a, a home loan, but you have some medical bills outstanding, okay? Your typical medical bill, okay? Really shouldn’t report on the credit report. Just keep that in mind. You can, you can owe a million bucks for all we know, okay? As long as it’s not on the credit report, a mortgage lender isn’t going to see it, okay?


  • 00:33                                   If it is on the credit report and it is in collections, and that’s really the only way to report to the credit agencies is in collections, that would adversely effect your credit score, pretty much change your credit score, okay? Um, and even if you’re in a repayment plan, until you’re really fully out of collections by paying off the debt, the credit score is going to suffer in a big, big way.
  • 00:54                                   Just to put things into perspective, the number one reason that we get a phone call for credit repair, is somebody that’s incurred a ton of medical debt, okay? The debt has gone past due, let’s say 90 days, 120, even 180 days or six months. And then that, uh, that debt was then referred to a debt collector and that debt collector placed it on the credit report.
  • 01:15                                   Um, let’s elaborate a little bit on medical debt, I just want to answer a question you’re probably thinking of right now which is, I thought medical debt couldn’t report to my credit report. Absolutely, it can.
  • 01:26                                   What they cannot do is report the physicians name on the credit report, okay? They do not want to breach patient privacy on either side, patient or surgeon. So what they will typically do is, either report the medical collection as a simple generic term like medical collection, and that’s it. And then the uh, phone number and address of a, a uh, of the company that’s doing the bill collecting for the hospital. But they usually will almost never ever report uh, the name of the hospital, the doctor’s office, the pediatrician, the dental office. They’ll always use a generic term and that’s how they get around violating the HIPAA laws or patient privacy laws, okay?
  • 02:05                                   So just to recap guys, how will medical bills affect uh, my ability to access credit? Out of Detroit, Michigan. Again, simple stuff, unless it’s in collections, it won’t. Um, usually you’re going to wait at least 120 days before it hits collection status. So if you just got the bill, don’t stress about it, reach out to that doctor’s office, or their medical billing company, whatever they’re using to manage that aspect of it. And if you can’t afford to pay it off in one chunk, immediately get into a repayment plan. And that could easily avoid any sort of collection status.
  • 02:36                                   Guy, this is Nik Tsoukales from Credit News Daily, thanks for tuning in today. You have a great day.