Delinquent medical bills affect credit score and mortgage
There are several misconceptions about medical bills in general and delinquent medical bills in particular, with respect to your credit report, credit score and mortgage. With the summer housing market getting more active, low interest rates and all the recent incentives, we have readers asking questions. A lot of questions.
Medical bills and credit score
First understand that medical bills don't get reported to credit agencies. That is if you pay them on time. However, delinquent medical bills go to collection agencies rather quickly after hospitals and/or physicians can't get their money. Such bills normally show up on credit report as Collection Account with type noted as Medical. Needless to say, your credit score will decrease. By how much depends on your overall credit history and, to the best of our experience, on the size of those bills.
Delinquent medical bills, credit report and statute of limitations
How long unpaid medical bills stay on the credit report is another big mystery for many. Unpaid medical bills is considered the regular bad debt just like late payments or collection records, so they stay for 7 years. And the longer they sit on your credit report, the less of impact they have. Statutes of limitations on medical bills are almost universally those of Written Contracts. Even though the preceding link is related to Virginia, you are more than likely in the same boat. See this post on statute of limitations on medical debt as well.
Unpaid medical bills and mortgage
First, delinquent medical bills affect your ability to get a mortgage. If your credit report is lower than minimum required score, you won't get it, period. Many readers don't think so. The confusion steams from the heydays of mortgage craze, where lenders didn't bother with any medical bills being in collections as long as they were below $400 and your credit scores were above 580. All you were to do is to pay them off at the closing.
Second, unpaid medical bills affect debt to income ratio. That is only true with large medical debt, which is considered a rather bad liability today. Either you have to pay it off before you get a mortgage and furnish a proof payment, then it doesn't affect the ratio. But if you can't do this and make monthly installment payments instead, it is certainly a part of you recurring debt expenses. If you can't pay it off and don't have repayment arrangement with the creditor or collector, you don't get a mortgage.
Other articles and resources on delinquent medical bills
Medical hardship letter sample
Medical dispute letter for credit reporting agencies
Medical collections, unpaid medical bills, HIPAA laws
Medical bill goes unpaid
Fri Aug 21, 2009 11:08PM | Copyright: www.bad-credit-advisor.com | More in Credit Score Help | Comments (0)
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