Medical bills get special consideration. Billing errors and insurance disputes, for example, can lead to late payments. In fact, according to a Consumer Reports survey of 1,000 adults who had at least one outstanding medical expense above $500 in a two-year span, 24% didn’t realize they owed the bill, 13% said they didn’t get the bill to begin with, and 10% said it was erroneously sent to collections despite having been paid.6 Other circumstances, like large unexpected medical expenses, can also lead to account delinquency – even for people with excellent credit history.
But, it’s usually harder for past-due medical bills to hurt your credit score than for borrowing-related bills to do so. Instead of reporting delinquent bills to a credit bureau, health care providers send them to a collection agency, and then the information is reported to the bureaus – which takes time.
In fact, as of 2017, the three credit bureaus jointly agreed to wait 180 days before medical debt sent to a collection agency would appear on credit reports.7 And as of July 1, 2022, the time period before unpaid medical collection debt would appear on a credit report increases to one year.8 This extension gives consumers more time to make payments, establish payment arrangements with medical providers or insurance companies, and resolve any errors – especially because medical debt in collections is less predictive of future payment problems than other types of debt collections, according to the Consumer Financial Protection Bureau (CFPB).9
If you’re working out a coverage dispute with an insurer, it’s a good idea to inform the health care provider and ask them to delay reporting late or missed payments. In certain states, you can appeal an insurance denial and, in some cases, you can negotiate the payment amount.
No matter the cause, if no resolution is reached, it is possible for late medical bills to ruin your credit. How big a dent medical bills make in your credit score also depends on the credit scoring model being used. Consumer Reports also notes that if a lender uses FICO Score 9, then your medical debt will be weighed less than other debts. That’s thanks to FICO’s recognition of all the issues just described. But the most widely used credit scoring model is still FICO Score 8, which counts all debts equally.