Do medical bills affect credit? It’s a question that many Australians ask when they are left with multiple medical bills to cover without a way to pay for them. Not paying your medical bills can lower your credit score. Despite past practises where it was up to the health care providers to report you to collection agencies or credit bureaus for debt, according to the new changes in the Australian laws for credit reporting from March 2014, unpaid bills will change your credit score and affect your eligibility for loans.
Understanding a credit report
A credit report is a personalized file which scores your personal finance history, and the most important report that will show whether you will get a credit. This report is used by banks and other providers to evaluate you on whether you are a good candidate for a loan. It allows them to calculate if you have the capacity to pay for the services and what is their risk in such case. Whenever you are applying for a credit card or a loan such file is prepared for you. In the past, this credit score was merely dependant on whether you have been denied a credit. With the changes introduced in March 2014 the assessment is made additionally with the focus on whether or not you’ve paid your credit on time. Or basically, whether you’ve paid your bills on time. Even though this is largely considered to be more realistic view on how good you are in repaying debt, for many people this is a dramatic change in their personal finances since a great number of people do forget or do not have the practise to pay the bills on time. On the side of favouring factors that help your credit score are established credit history, monthly repayment history etc.
How to get your credit report
If you want you can contact a credit reporting body to obtain a copy of your credit report. There are several offices throughout the country. They will ask for your personal information to enable them to properly identify you. This could include your: full name, address, date of birth, previous address, driver’s licence number.
You can get a copy of your credit report for free from a credit reporting body in all of the following circumstances: if you have applied for, and been refused credit, within the past 90 days, where your request for access relates to a decision by a credit report body or a credit provider to correct information included in your credit report, and once a year (not counting the above circumstances).
Your credit reports will be issued within 10 days of the receipt of your request, however, if you want your report immediately there may be a charge involved. You can check with the credit report body about any charges involved in getting your credit report immediately.
How to prevent poor credit
In order to prevent medical bills to affect your credit score one of the things you can do is contact the hospital and other providers of medical services and agree on payment on installments that you can pay and stick to the agreed date and amount. If you have difficulties paying for medical services explore some of the possibilities for financial aid from governmental, non-profit organizations or medical fundraising for covering treatment costs. And always consider the out-of-pocket costs of treatment that can block your credit cards and affect your credit score on a long run.
Additionally, patients and their families can look into other ways of getting financial assistance. One example is through contacting your local non-profit organisation that may be able to provide financial assistance in terms of accommodation, transport, low cost medication and even reduce the cost of treatment.
Medical fundraising online is also a great alternative for individuals who require financial assistance. Patients can reach out to family members, friends and extended networks to raise funds online completely for free. This has become a growing trend for many Australians to cover the cost of medical treatment and to ensure that their credit rating is not affected in the long term.
1) Comprehensive credit reporting: http://www.veda.com.au/yourcreditandidentity/comprehensive-credit-reporting
2) Late payers are running out of time: http://www.smh.com.au/money/late-payers-are-running-out-of-time-20130504-2izh6.html
3) How do I get a copy of my credit report?: http://www.oaic.gov.au/privacy/privacy-topics/credit-and-finance/how-do-i-get-a-copy-of-my-credit-report