How are medical bills treated when applying for credit?

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.


Medical bills and your credit

Can Medical Bills Hurt Your Credit Score? – Credit Tip #18

One common credit score killer is medical bills – and many times, your score could suffer due to a misunderstanding with your insurance or your doctor, potentially docking you big points for something that isn’t necessarily your fault. Other times, your score could suffer because you simply just can’t afford the cost. In fact, medical bills that go to collections are treated the same way as any other type of bill that goes to collections in the FICO score formula. Analysts say that just one medical bill that has gone to collections could drop your credit score by 100 points, thereby forcing you to enact a lengthy credit repair strategy to bring the score back up over time.

For additional information feel free to contact our office at 617-265-7900 or schedule a free consultation below.

Medical Credit Cards – What to Look Out For?

A scary number of Americans lack health insurance or are underinsured. Medical bills are the single most common factor in bankruptcies. If you find yourself faced with an pricey procedure at the dentist, a specialist, or even at the vet for your favorite furry or feathered friend, the staff may point you toward medical credit accounts. These are easy to get credit specifically for medical and veterinary costs. They can seem like a tempting option, but, there are a lot of reasons to beware:

Many Patients Mistakenly Believe They’re Signing Up for an In-House Payment Plan

Some practitioners do offer payment plans in-house. Often, these will not include interest and will allow the patient to pay the cost off over a period of a few months. Carefully read before filling out forms so that you know what it is you are agreeing to.

The Terms Can Be Confusing

In the state of New York, the attorney general discovered that 90% of people who signed up for a medical credit account opted for an option that would cost no interest if paid in full. About a quarter of those wound up paying interest rates of over 26%.

Medical Cards Have High Interest

Generally, there will be a short no-interest period to pay back medical funds. But, after that, interest rates typically soar, with hefty fees for late payments. This is because these cards are usually given without checking your credit history. This makes them high risk credit, which can come with up-front fees or interest rates up to 30%.

A few ways to make sure that you don’t fall prey to high-interest medical cards:

  • Build an emergency fund. This fund can keep you financially stable when dental, medical or vet bills come up.
  • Ask for an in-house payment plan. Many offices are willing to accommodate your request if you ask.
  • If you do need to borrow, check out other options first. A friend or relative may be willing to give you a less painful interest rate. Or, you may be able to qualify for a lower interest card.
  • Look into sliding scale care. You may be able to find more affordable treatment at a sliding scale clinic and avoid going into debt.
  • If you do wind up taken advantage of, contact your state attorney. In New York, the state attorney’s office has helped consumers by requiring a clear disclosure of interest rates, a three-day “cooling off” period before commitment, a grievance process and an appeals process for disputed claims. They estimate that their process will put $2 million back in the pockets of consumers who feel duped by medical credit companies.

As with any financial transaction, do your research before you sign on the dotted line. Education helps you protect yourself and your family against predatory practices and makes you stronger and more resilient.