How Doctor Bills Affect You Getting a Loan

Doctor's bills can be worrisome.
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In the process of getting a loan, a lender will look at your financial history. Typically, the easiest way for a lender to get a complete look at your financial history is through a credit check. A credit check involves the lender getting a copy of both your credit score and your credit history. If any of your previous doctor's bills have been sent to collections, the lender will immediately see them on your credit report. If the outstanding collections are not paid, the lender may refuse the loan. Additionally, the lender may make the loan closing contingent upon those collections being paid in full first.


In most cases, when a doctor sends a patient a repeat bill that goes unpaid, the doctor turns that payment over to collections. Basically, the doctor sells the delinquent bill to a collection agency at a reduced rate in order to get some payment on the debt owed. At that point in time, the collection agency aggressively goes after the patient in order to collect the monies owed. Additionally, this collection payment goes onto the patient's credit report. If the patient owes the doctor money for an outstanding bill, but the bill has not been sold to a collection agency, lenders will not know unless the patient tells them.

Credit Report

When a collection hits a credit report, it is noted as an outstanding debt by the lender. Until that collection is paid in full, the negative item is listed as owed by the patient. A collection that is not paid may or may not ever roll off of a patient's credit report. However, it will roll off after seven years if paid in full. Keep in mind that some lenders will require full payment of outstanding collections to approve a new loan. Additionally, outstanding collections negatively impact a patient's credit score.

Raising Your Credit Score

In addition to looking at the patient's credit report, the lender will look at the credit score as well. The higher the credit score, the more likely the lender is to approve the new loan and the better the terms will be. In order to raise your credit score, pay off outstanding collections. Additionally, pay down any credit card balances to less than 30 percent of their limit. These two actions can quickly raise a credit score, but it may still take two months to fully see an effect on the credit score.

Pre-emptive Strike

If you have several outstanding doctor's bills, talk to the holder of each one prior to the bills going to collections. State your case and request the option of a payment plan. Not all doctors will allow this; however, it may be a better alternative to them than sending your payment to a collection agency. In some states, as long as a patient is paying something toward a medical bill, it cannot be sent to collections. Speak directly with your doctor or hospital for your state's laws on this matter.

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