Medical debt is a prevalent issue in the United States. It is estimated that 41% of Americans have some type of health debt, according to a 2022 report from the Kaiser Family Foundation.
Fortunately, health debt does not carry as much weight as other types of debt and generally does not affect your credit unless it is sent to a collection agency.
The healthcare provider you owe will not wait forever for you to pay. If your bill is long overdue, it is likely that they will sell it to a collection agency.
Even after that, not all unpaid medical debts will end up on your credit report. As of April 2023, the three credit bureaus – Experian, TransUnion, and Equifax – have removed from credit reports all unpaid medical debts that had an initial balance of less than $500. Any new medical debts below $500 will also not appear on credit reports.
And if your medical debt is over $500, you still have time. Specifically, the credit bureaus offer a 365-day waiting period before unpaid medical collections appear on the consumer’s credit record. This grace period provides an opportunity to resolve the issue by working with an insurer or finding other means of payment. Paid medical collections do not appear on the credit history.
Once the waiting period is over, the collection will appear on your credit profile. Unless you pay the collectors, the debt will remain there for seven years and may negatively affect your score.
How to check your credit history?
By law, you are entitled to a free copy of your credit report from each bureau once a year. And currently, you can obtain free weekly credit reports at AnnualCreditReport.com.
Alternatively, you can use a free credit monitoring service, such as those offered by banks, for example.
If you notice medical debts on your credit history, first make sure they actually belong to you. Any debt below $500 and less than a year old should not appear on your history. If you find any incorrectly reported medical debt, you can dispute the debt and (hopefully) have it removed.
But if the debt legitimately belongs to your history, the only way to get rid of it is by paying.
Source: CNBC