Medical bills have the potential to wreak absolute havoc on a person’s credit. Large amounts of debt, medical or otherwise, have a long history of demolishing credit scores and taking away financial freedom.
Given the often unexpected and sudden way in which medical bills can hit credit reports, this type of debt can be especially damaging. Unlike credit cards and other debt, medical bills are not built up slowly and there is no spending limit, so the potential for large-scale damage is much greater.
Even after the bill is paid in full, the item remains on a credit report for seven years. Although the impact of the collection on your credit score will diminish as the collection gets older and will eventually “fall off,” medical bills can cause quite a stir in your finances by limiting your credit opportunities. As a result, you might only qualify for high-interest, high-fee loans and credit cards.
Medical bills are the number one reason for filing bankruptcy in the U.S. Adding insult to injury, bankruptcy can stay on a credit report for up to a decade, three years longer than a negative credit rating due to a debt collection.