Overdue Medical Bills And Credit Scores

Reader Question: Do overdue medical and hospital bills affect your credit score?

Yes, overdue bills of any kind can affect your credit score, if they are sent to a collection agency or otherwise reported to the credit bureaus. In fact, your past payment history (including your medical bills) will affect your score more than any other single item.

Let's take the FICO score as an example. FICO is the most common scoring model used in the mortgage industry (among others). Under this model, payment history makes up 35% of your score. Your overdue medical bills will fall under this category.

But you have a certain period of time after a bill is overdue to get paid up before it goes to collection, and before it affects your credit score. I don't know the typical timeline for hospitals, but most companies will send the standard overdue notice after 30 days. Later, after 60 days, they will send a stronger notice with the threat of sending the case to a collection agency. This is their way of saying: "You still have a chance of paying this bill before it affects your credit."

After 90 days, give or take, most companies will report the overdue bills to the credit bureaus (that's where your credit reports come from), and they'll likely send the account to a collection agency as well. This is when your score can be affected, since it is based on the information within your reports.

So to summarize, any type of overdue bills -- whether they are medical payments, student loans, car payments or credit cards -- can lower your score if they are reported to the credit reporting agencies (TransUnion, Equifax and Experian). Typically, past-due payments are not reported or sent to collections right away. The billing departments typically go through a standardized process of sending a "friendly reminder," then sending a less-friendly reminder, and finally turning the whole thing over to a collection agency.

So it's best to pay your medical bills on time. If for some reason you cannot do that, be sure you pay them as soon as possible. Specifically, don't let them go overdue more than 30 - 45 days or they could be sent to collection and reported against you.

Important Note: The timelines I have explained here are just general rules. They are not legal guidelines. If a company wanted to, they could report you for being 5 days overdue on a bill payment.

Related articles:

• How will missing car payments affect my credit score?
• How long does negative information stay on your report?