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5 Facts Worth Knowing About Medical Debt and Credit

Written by John Ulzheimer

“But it’s only medical debt. Medical bills won’t really hurt my credit that badly, right?”

This sums up the general attitude from consumers regarding medical debt, medical collections and how they subsequently impact credit report and credit scores. It makes perfect sense because nobody chooses to get sick and incur large medical expenses.

The reality is that unpaid medical debts can be just as problematic as any other defaulted liability.

Here are five things you should know about medical debt and your credit reports:

1. How medical debt gets on credit reports


Through collection agencies, medical debt gets reported onto credit reports. Medical debt is not reported to the credit bureaus the same way as other consumer debts like auto loans, mortgages, credit cards and student loans, however.

Most medical debt will never show up on a consumer’s credit report as long as it has been paid.  If your debt goes into default, however, you can almost guarantee it will eventually end up on your credit reports.

When a medical debt goes into default it is almost always outsourced or sold to a collection agency. Once a collection agency is involved they will likely report it to the credit bureaus and therefore will show up on the debtor’s credit reports.

Even medical collections for a very small amount can have an extremely negative impact upon a consumer’s credit scores, even under FICO 9. The reason collections can be so problematic for credit scores is because the incident of a debt going to collections is very predictive of elevated credit risk.

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John Ulzheimer

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