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Ask What If: Medical bills and your credit score

QUESTION: My friend told me that if you do not pay your medical bills they do not report you to the same credit bureau as they do if you default on a loan or fail to pay back a credit card– so technically all you have to do is change your address and the hospital can’t find you. Is this true?

ANSWER: Unfortunately, no. Medical bills do get reported to the same credit bureaus as other debt.

In fact, over half of all collections accounts that show up on consumer credit reports are unpaid medical bills, and a study by the American Journal of Medicine found that 62% of all bankruptcies are medically related:

It’s possible that your friend thinks she’s beaten the system because she hasn’t heard from the hospital in a while. She’s probably wrong about that too.

Unpaid medical bills almost always goes through a collection agency first, which is where things will sometimes get weird. If it’s not a lot of money the collection agency might not try to collect, but they’ll still report it to the credit bureaus without telling you… and you won’t find out until you check your credit score or apply for a loan.

And that’s not the only source of confusion, as The New York Times reports:

Because of privacy laws, it can be difficult to determine from the vague information on your credit report where these unpaid bills originated. What’s more, unpaid bills in collection can be some of the most damaging items on your report.

“Collections are weighted more heavily than other unpaid or late bills,” said Rod Griffin, director of public education at Experian [a credit reporting agency]. “They will have a more serious effect on your credit score.”

The New York Times article also has tips for dealing with health care providers, collection agencies, and credit bureaus to help prevent health care bills from ruining your credit score– it’s definitely worth reading the entire thing here.

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