The Link Between Hospital Stays and Credit Scores

With medical costs gradually increasing each year in the U.S., consumers may find it hard to catch up with payments. Medical debt from hospital stays is a burden many Americans face, causing many to be worried about the impact unpaid bills have on their credit score. 

Employee health care costs in 2014 have jumped nearly 150 percent compared to a decade earlier, according to a survey by Aon Hewitt. The average out-of-pocket costs per employees are expected to reach $2,470 this year. The combined cost of health care, which include both out-of-pocket costs and employee contributions of the total health care premium, will increase to $4,969 in 2014, which may result in a heavy burden for consumers hoping to pay off all their medical bills, according to the same survey. 

Growing medical costs could result in unmanageable hospital and health care bills. About 1 in 3 Americans said they struggled with paying their medical bills in the past year, saying they either are paying them little by little or cannot afford to pay them altogether, according to Kaiser Family Foundation. 

In case consumers fail to pay hospital bills on time, late or overdue payments may show up as delinquencies on their credit report. In the past, medical debts that end up in collections have been considered to be negative items on a credit report. There may be hope for consumers who cannot pay their debts on time. Credit score provider FICO is planning to switch to a new scoring model later this year, CNNMoney reported. In the future, medical debt, even those in collections, could actually raise your FICO credit score.

Here are ways to remove medical debts from hospital stays on your credit report:

Negotiate a Payment Schedule with the Billing Department
If you are unable to pay your hospital bill in full, you should contact the medical center's billing department to check whether you are able to set up a payment schedule that will allow you to make gradual payments. Keep in contact with the hospital to ensure you continue to chip away at your medical debts. 

Review Bills and Remove Errors on Your Credit Report
Before sending a payment, you should carefully review your hospital bills and ensure they are accurate. In case there are mistakes, you should contact the hospital and get the mistake corrected. In the event the mistake is not caught early on and you might be marked delinquent on payments, you should request your credit report from one of the three main credit reporting bureaus and contact them about any necessary changes.