Credit History & Medical Bills

Medical bills affect your credit history under certain circumstances, even though they do not involve revolving credit lines or installment loan payments. Walecia Konrad, a writer for "The New York Times," warns that such bills sometimes pop up on your credit records while your claims are still being processed by your insurance company. You can sometimes prevent or mitigate damage to your credit rating caused by these accounts.

Initial Reporting

Most of the accounts on your TransUnion, Experian and Equifax credit reports are directly credit-related. For example, your report includes your mortgage, any vehicles loans, retail and general credit cards and personal loans. The February, 2003 "Federal Reserve Bulletin" advises that certain non-credit accounts, like utility or medical bills, sometimes appear on your credit reports if the utility company or medical facility shares data with the credit bureaus. Reported doctor or hospital bills help your credit history if you pay them on time and blemish it if you are habitually late or default completely on the accounts.

Collecton Reporting

Medical bills that go to collection agencies appear on your credit reports even if the initial accounts were never reported. Debt collectors notify TransUnion, Experian and Equifax as part of their usual account-handling process. Medical collection accounts become part of your payment history when your credit score is calculated. Thirty-five percent of the score comes from that category, according to the myFICO score information site, so medical collection accounts weigh it down.

Legal Action

Medical facilities or collection agencies sometimes sue over unpaid debts. These creditors receive judgments if they win their cases, and the "Federal Reserve Bulletin" advises that the public court records become part of your credit reports. Judgments look bad on your credit history because they represent unpaid bills, and they also figure negatively in your credit score. Your state laws may allow the creditor or collector to garnish your paycheck or put a lien on property to collect the outstanding amount of the medical bill.

Considerations

You may be able to salvage your credit history before a doctor, hospital or other medical service provider sells your bill to a debt collector if you reach a mutually acceptable payment agreement. Konrad explains that doctors and hospitals get more money by settling with you because collection agencies only pay pennies for bad debt accounts. Strike an agreement with the debt collector if your bill was already sold, offering to pay the account in exchange for expunging the entry from your credit bureau reports. The negative medical account stays on in your credit files for seven years if you do not settle it, Jay MacDonald of the Bankrate financial site warns.