Medical debt is the most common type of debt people have. It is very easy to end up with large medical bills you cannot pay that make their way onto your credit report.
If you struggle with medical debt, you may wonder how badly it is impacting your credit score. According to Experian, it will lower your score, but the way credit bureaus handle medical debt differs from other types of debt, so it may not have as big of an impact.
The first difference with medical debt is the process of reporting it. Most often, medical debt is quite old before the credit bureaus ever add it to your report. There are a couple of reasons for this.
First, your medical provider will not directly report the debt. It will sell it to a collection agency who will then report it. However, it can take a while for the provider to sell the debt. They will try to resolve it with you prior to taking collection actions.
Second, once the credit bureaus get the debt, they hold it for 180 days before reporting it on your credit. They do this to allow for the resolution of mistakes, such as billing issues or errors, and to give you a chance to clear the debt by paying it in full or making a payment plan.
When the bureaus do report it, credit score formulas do not treat it the same way as other debt. When creating scores, systems give weight to debts, which means the percentage they count towards your score. They do not weigh medical debt as heavily as other debts, so it will not have as big of an impact as something like a credit card debt.