There is no one decisive factor to determine how unpaid medical bills affect credit, as reporting of these debts varies according to individual state laws. Depending on a number of factors an unpaid medical bill can have as detrimental affect on credit as any other unpaid credit obligation, or it could have a lesser, low or no impact.
Typically medical bills are reported later than other unpaid bills, though not always. Medical providers often allow the bills to reach default stage before passing them on for collections activity, at which point they will appear on credit reports. If an account is passed to an external collections agency then the affect is most likely to be as detrimental as any other unpaid bill reported in collections.
It is perfectly viable for an unpaid bill to appear on a credit report due to a failure on the part of an insurance company to settle the outstanding amount in a timely fashion. This can be taken up with the insurance company or disputed through the online credit dispute facility which the three main credit agencies provide.
It is worth speaking to the medical provider if there is a delay in the insurance company paying medical bills and request that they take no reportable action until the matter has been addressed with the insurer.
Genuine unpaid medical bills which are the individual’s responsibility to pay will have a detrimental impact on ones credit, if they are passed to external collections agents to recover. Spouses who were living with the debtor at the time of the bills being issued can find themselves, in some states, equally responsible for the debt. This then impacts on their credit report as well.
Much depends on the attitude and actions of the medical provider. Collection on medical bills is becoming more commonplace and more aggressive, which can negatively impact on more than just credit if there is an ongoing illness.
If the bills are settled some medical providers may be willing to request that the credit agency removes the detrimental information from a credit report, but once logged it is not possible to have accurate information pertaining to unpaid bills removed. The solution would be to pay the bill as soon as possible.
Those who do manage to catch up and pay missed medical bills can request a statement is attached to their credit report explaining the reason for the late payment, citing the illness as cause. Other lenders will then be privy to this information and realise the exceptional circumstances which resulted in late payment.
Having ones credit plummet due to medical expenses is a hard pill to swallow, thus it pays to talk to the medical provider early if there is a possibility of bills going unpaid. It may be possible to negotiate a payment arrangement with the medical provider which will help to protect ones credit.