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How medical debt factors into a credit score

According to Consumer Reports, roughly 30 percent of all Americans have medical bills of $500 or more. An inability to pay those bills could have an impact on the credit score of those who live or work in Florida. For instance, a poor credit score or history could make it harder to rent an apartment. Furthermore, insurance rates, as well as interest rates on loans, could be higher for those who have a checkered credit past.

However, there is no guarantee that a medical debt will have a negative impact on a person's credit score. The FICO 8 credit model does not take into consideration any medical debt that is less than $100. It is also important to note that debt that is sent to collections does not appear on a credit report for at least 180 days. Therefore, debtors may have an opportunity to avoid having the debt reduce their credit score or ruin their credit history.

It is always a good idea to ensure that any medical debt is legitimate before agreeing to pay it. Individuals should check to see that their insurance providers have covered any portion of the bill that is obligated to pay for. It is also possible to challenge the validity of a debt under the terms of the Fair Debt Collection Practices Act (FDCPA).

Those who are facing financial challenges because of medical or other types of debt may want to consider filing for bankruptcy. Bankruptcy may reduce or eliminate most or all debts a person may have. Once a debt has been discharged, creditors may no longer pursue payment. During the proceeding itself, creditors are generally barred from contacting a debtor directly. Instead, they must contact that person's attorney until the case is over.

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