How is medical debt handled differently?

All it takes is one medical emergency and you get buried in medical debt from New Jersey hospital and doctor bills. If you are concerned about your credit, this could be a big blow. However, according to Consumer Reports, medical debt is not treated exactly the same as other debt you may incur.

The first difference is that it is not immediately reported. With a debt such as a credit card, the company is reporting regularly about your payment or nonpayment. That does not happen with a medical bill. It is only reported after it is not paid, and even then, it is not reported until it goes to a collection agency. Regulations also mandate that you are given 180 days after it is reported to the credit bureau before it is actually put on your credit report. This gives you extra time to pay it or clear up insurance mishaps related to it.

In addition, as soon as the debt is paid, it must be removed from your credit report. It is also weighted differently when figuring your FICO score, which is the score lenders use to assess your creditworthiness. It will lower you score to have a medical debt on your credit record, but it will not lower it as much as other types of debt.

Of course, it is always a good idea to try to pay any debt so it will not have a negative impact on your credit, but if you do have medical debt, rest assured it will not have the same impact as other debts. This information is for education and is not legal advice.

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