Do Creditors Look at Medical Bills?


Medical Bills

Taking out a loan can be one of the best moves to make when in dire need of money. However, before you visit your bank to seek a loan, you need to understand some things. First off, you need to understand that loans don’t come easy. Secondly, you need to realize that creditors usually carry out checks to determine the creditworthiness of a potential borrower before offering them a loan. They usually review the credit, debt-to-income ratio, income and employment, and a few other things. That said, if you have medical bills, you may want to know if creditors consider them.

Creditors don’t look at medical bills specifically as it doesn’t show up on your credit report until it is sent to collections. Once your medical debt is sent to collections, it’ll affect your credit score and make it hard for a creditor to offer you a loan.

Before deciding to lend you money, a creditor will want to know your creditworthiness. No one likes the unpleasant idea of racking up bad debt, so these creditors usually look at a few factors to determine if you’ll be able to pay back the potential loan or not. Some of the factors they consider are your credit history, income and employment history, debt-to-income ratio, among other factors–what of your medical expenses? Do creditors consider them? Can medical bills affect your credit? It would be best if you considered these questions before you apply for that loan. Lucky for you, I have provided the answers in this article.

Can Medical Bills Be Sent to Collections if You Are Making Payments?

Do Creditors Look at Medical Bills?

The act of requesting or applying for a loan is not as easy as it seems, the same with paying back. Before you request a loan, it makes sense to ensure that your financial profile is compelling enough to raise your chances of getting the loan. If peradventure, your financial profile is bad, your loan application may be rejected, or you may be offered a loan with strict repayment terms. Such arrangements are bad business for borrowers, especially those with a lorry load of preexisting debt.

Like every business, the goal of creditors is to make a profit on each loan they dish out, and the best way to do that is by ensuring that they lend money only to those who will pay it back. That is why creditors conduct checks to ascertain the creditworthiness of potential borrowers before deciding to offer the loan. These checks usually revolve around the credit history, income, and overall financial situation of the borrower.

That said, if you have unpaid medical bills, you may want to find out if it will hinder your chances of obtaining a loan from creditors. Put differently; you may want to determine if creditors look at medical invoices.

Do Creditors Consider Medical Bills?

Creditors usually consider a lot of things in a bid to determine your creditworthiness. However, your medical bills aren’t one of them, and this is because they don’t appear on your credit report until they get sold to a collection agency. A medical debt that is sold to a collection agency wouldn’t only appear on your credit report. It will as well affect your credit score.

Thus, to ensure that your bills don’t scupper your chances of obtaining a loan in the future, make an effort to pay it off before it gets sent to collections. Your medical bills and credit are intertwined, which means that it has the potential of tarnishing your credit score and credit history as a whole.

What Do Creditors Look At?

One of the main things most creditors consider is your credit history. Your credit history contains information such as your credit accounts, balances due, and details of your payment history contained in your credit report.

While scrutinizing your credit history, creditors usually keep an eye out for things like your:

  • Payment history
  • Outstanding debt
  • New account
  • Type of credit used

Generally, creditors are after those little cues and guarantee that you’ll be able to pay back what you owe in time. That is the main reason for these checks.

Do Medical Bills Affect Your Credit Score?

When it comes to medical debts, you often find people asking questions like, “Do unpaid bills affect your credit?”

Like any other debt, unpaid medical expenses can affect your credit and hinder your ability to request a loan, buy a property or secure a job in the future. Medical debt usually comes with a certain risk: The most significant factor in credit scoring is payment history, which signifies how regularly you pay bills on time. If you decide not to pay your health care bills even when due, your credit may take a hit as a result.

Worthy to note is that medical debt doesn’t affect your credit score unless it is reported to a credit bureau, and this usually happens when your debt is sold to a collection agency. That said, if you want to protect your credit score ensure you pay your bills before it is sold to a collection agency.

How Long Do Medical Bills Stay on Your Credit?

Medical bills stay on your credit report for seven years after it is reported to your credit bureau. Having such a bill on your credit report may hinder your chances of securing loans in the future. Thus, rather than experience this, pay those unpaid medical bills in time.

What Is a Good Debt-to-Income Ratio?

What Happens When Your Medical Bills Go to Collections?

Creditors are usually patient when it comes to urging debtors to pay what they owe. They try a few tactics to encourage debtors to make payments. However, if these moves don’t work, they’ll sell the debt to collections. Having one’s debt sent to collections is one of the worse things that can happen to a debtor. If you defaulted on your medical debt and it got sold to a collection agency, you may want to know what would happen next.

When a medical debt Is sent to collections, the collection agency that bought the debt may report the account to one or more of the three credit bureaus (Experian, TransUnion, and Equifax).

Once your debt is sold to a collection agency, the agency will reach out to you for payment, and you will no longer be contacted by your creditor or be able to pay them directly. Hence, payment will have to be made to the agency and not the medical provider.

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