Do outstanding medical bills hurt your credit rating?
May 4, 2012 12:50 PM   Subscribe

Has there been a recent change in the relationship between medical debt and your credit rating/score?

During a recent discussion about articles like this one, my friend told me that it used to be that a person with outstanding medical bills could be harassed by collection agencies, but that one's credit score would not be negatively affected by outstanding or unpaid medical bills.

Has there been a recent change in law or policy they may be referring to? Does anyone know anything about the veracity of such a claim?
posted by RajahKing to Health & Fitness (4 answers total) 2 users marked this as a favorite
I'm not aware of any recent regulatory changes. The Times article is a pretty accurate summary of the way things have been for some time, which is that it's extremely rare for providers to report debts owed directly to them to credit agencies (but not totally unheard of for ones that are extremely aggressive about collections), but that when the debt is turned over to a collections agency, the agency does so as a matter of course.

There is a pretty wide variation of how aggressive providers are about collections - I've seen some providers that have a policy of never starting legal proceedings against debtors since they believe it's inconsistent with their mission as a non-profit (though they still do use collections agencies), and others, also not-for-profit, that had whole days set aside in the local courts just to put liens on people's houses.
posted by strangely stunted trees at 2:07 PM on May 4, 2012

I had medical debt in 2008 and 2009 which went unpaid for 18 months while a settlement was worked out (the bills were a result of a traffic accident which was the other guy's fault).

The collections calls started almost immediately, so I'd concur with that part. However, all medical debts WERE reported to the major bureaus, presumably with negative consequences. In my case, part of the settlements with each creditor included a stipulation that negative information be removed, and my reports were then cleaned up after everyone got paid. My credit score is now nearly perfect; I do not know what my FICO score would have been during the encounter but the negative info was certainly on the reports and I presume it would have been - bad.
posted by randomkeystrike at 2:10 PM on May 4, 2012

Having seen SST's comment - I'd partially concur in that some medical providers were helpful and nice (at least at first) and some reported me and some didn't. But others (and not always the ones with the big bills) turned me over to attorneys in as little as 90 days. It MIGHT be rare for medical providers to directly report, but since many/most of them WILL send you to collections... you see where I'm going with this. I can't recall if I had any providers appear directly on my bureau reports, but I'm pretty sure I had at least one hospital.

The disconnect might be that many medical providers are essentially small businesses - doctors offices, ambulance providers, etc., and they don't bother with the bureau relationships because, again, they farm out their collections.
posted by randomkeystrike at 2:13 PM on May 4, 2012

About ten years ago, I worked in customer service for a department store credit card and was the first line of approval for credit increases and, sometimes, card applications. I've also had many medical bills over the years.

Medical bills could and did influence credit scores then, and to my knowledge, that hasn't changed at all--except maybe in that doctors, etc, have gotten more aggressive about pursuing people, and are more likely to send them to collections agencies (which is when they get reported to credit bureaus, generally speaking).

Also, when I worked for the credit card, we were allowed to look at the specifics of a customer's credit report and approve them for an increase or card if it seemed that a low credit score was due to unpaid medical bills (as opposed to unpaid credit cards or loans). My suspicion--though I have nothing with which to back this up--is that medical bills are now treated as any other debt.
posted by MeghanC at 12:23 AM on May 5, 2012

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