If I do not pay a medical bill can it effect my credit score?

Medical problems and accidents can be debilitating and catastrophic on a personal level and can, especially in the United States, leave you with astronomical bills you cannot afford to pay. In 2009 a CNN report listed medical debt as the primary cause of 60% of all bankruptcies in the country. Even people who have medical insurance can run into problems, with over 60% of families reporting debt problems due to medical expenses having medical cover.

The good news is that most doctors and hospitals do not report late payments to the credit bureaus. However, once a collection agency has been called in, and the matter is taken to court with a judgment made against you, then then it will be reported and will have a negative impact on your credit score. That said, credit bureaus often give less weight to debts incurred due to medical charges, so the effect on your score may be minimal.

One thing that third parties (the information does appear on a self-requested report) will not see is any details of the medical treatment received, any medical conditions, name of physician or medical facility that treatment was received at. Lenders who look only at your credit score may be more reluctant to extend you a loan, or may insist on higher interest rates thanks to negatives caused by medical bills. However, many lenders who take the time to analyze a credit report in more detail are sympathetic to such negatives, and often overlook them when assessing an individual’s chances of defaulting on their loan payments.

If you feel that your medical bills may be a factor in being turned down for a loan, then it is probably worth contacting the lender and explaining that the reason for your lower score is due to medical expenses. This is especially true if you appear to have made efforts to address the late payments. It may also be helpful to know that if your medical bills exceed 7.5% of your annual income then they can be treated as tax deductible, which may help offset the expense somewhat.

By Douglas Crawford.