Is Medical Debt at a Collection Agency Put on a Credit Report?
- Your credit report contains information about your use of credit over the last seven to 10 years. Three companies, known as credit reporting agencies or CRAs, maintain consumer credit reports: TransUnion, Experian and Equifax. Each of these companies relies upon creditors to report borrower information. Once the CRA receives creditor information, it adds it to the report. It is up to each individual creditor to determine what, if any, information it reports to the CRAs.
- Medical debt is a form of unsecured debt where you do not have to give up collateral or a security interest before incurring the debt. Medical creditors, therefore, cannot legally take your property if you don't pay the debt. They either have to sue you and win the lawsuit or try to get you to pay.
- When you fail to pay back your medical debt on time, your creditor may hire a collections agency in an attempt to collect the debt. The collections agency will try to get you to pay by making phone calls, sending letters and otherwise trying to persuade you to repay the debt. They typically also report any delinquent debtor to one or more of the CRAs, according to Card Report, though they are not required to do so.
- Whenever you fall behind on bill payments to the extent that a creditor hires a collections agency in an attempt to recover the funds, that information hurts your credit score. Your credit score is a number based on the information found within your credit report. Though the companies that calculate credit scores use different formulas and have different methods for measuring the impact of any negative factor, Yahoo Finance reports that a single 30-day late payment can lower your score 60 to 110 points and a collections action will probably have an even greater impact.