How Bad Does Medical Bills Affect Your Credit Score

How does medical debt affect your credit score?

Studies have shown that one of the main factors for having a low credit score is due to unpaid medical expenses. Medical expenses can often be very expensive and seems to simply creep on unwary individuals. People who end up at the hospital for only a short while often get large and outrageous hospital bills. In some cases these bills could be wrong and costly to the individual. What makes these medical bills even worse is that they sometimes arrive many months after the actual date in which you were at the hospital. This can put families in very tight situations especially because of high base costs that hospitals often charge. In the United States, many do not know how or simply do not check their credit score. By not checking your credit score, you put yourself at risk to mistakes being made in your credit and a risk of very high interest rates in the future.

What is a medical credit score?

A medical credit score is a recent evolvement in the credit scene, used to assist hospitals to determine a person’s healthcare credit score and to record the footsteps of a patient’s medical history. Also known as MedFICO score, the term was emerged out of the idea of determining an individual’s admittance to healthcare based on his/her credit score, which is similar to the FICO score. Essentially it is to analyze a person’s ability, or rate, to pay their medical bills. If you received any medical treatment in the hospital, you’ll notice medical bills charged from a variety of sources, not simply one source. Unlike utility bills in which all the different types of charges are listed under one statement, medical bills are independently processed and collected by various departments from the ambulance agency to the X-ray technicians. Your health and credit history correlates together on judging the benefits or loss of your credit score by how quickly you can pay back that debt.

Just like how lenders review credit reports when deciding the levels of risk you’ll fall under when applying for credit, your medical credit score is equivalent to those credit reports. Your medical credit score determines how likely you are to pay for medical expenses in the time given. An individual’s bill payment history from hospitals will be collected and appointed a medical score, very much like a credit score. Hospitals take consideration of a patient’s medical credit score after they are discharged to conclude how quickly debts will be listed as uncollectible, in which the patient is unable to pay.

A prolonged effect

Unfortunately there are several events that can cause a person to be punished for not being able to pay in the due time, despite having a good credit rating and health insurance. Additionally if the patient’s medical bill is not covered by an insurance company, he/she may not be aware of this until months later. As a result, it would take long, tedious months of calling each department to fix the issue, as the bills may be directed to a collection agency. This will result in an unfavorable impact on the patient’s credit score. In parallel, there is also a worriment that people having difficulty cleaning up their bad credit score that it would affect MedFICO as well. Or if MedFICO determines a individual’s admittance or omission for hospital stay.

It’s recommended to review the copies of your credit report from the here main credit agencies, to spot and any medical claims listed on your credit report that you have not acknowledged yet. Therefore you are able to dispute any claims that are labeled as unpaid and track future false claims that can impact your credit rating.

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