A trip to the hospital or the doctor’s office can be quite costly. With the complexities of health insurance, many people find themselves in medical debt due to the limitations of their health policy or choose to forego health insurance entirely.
Many healthcare providers including doctors and hospitals offer ways to pay for your health care in the event that you or your health insurance policy cannot fully afford the bill upfront. However, this can make a major difference to your credit report, even though your score may not be affected significantly, it can signal to prospective lenders that you have too much debt on your plate.
What Medical Debt Can Do To Your Credit
As far as scoring, FICO and Vantage Scoring models take outstanding medical debt lightly, but that doesn’t mean you should. Even though a credit score is an ultimate tool to determine what your credit history is like, lenders do pay attention to the information inside your credit report. Most billing partners for health providers will give you a certain amount of time to pay before the debt goes into collections or even shows on your credit report. Wheather or not, the billing providers will report this information to the credit bureaus vares. Larger health bills, such as surgery or an emergency room trip, may require healthcare financing through specialized lenders. This will show up on your credit report. Since Medical debt can also still have an impact on your debt-to-income ratio, which can ultimately affect your score and potentially, odds of approval for new credit.
How You Can Benefit from Paying Medical Bills with Credit Cards
Credit cards allow you as an individual to make purchases however you want. Credit cards don’t report what you’ve been purchasing to credit bureaus, so this means that medical debt can stay off your credit report. Medical Finance providers typically work like installment loans, having one flat monthly payment. Credit cards will give you more flexibility ing off the balance. Credit cards also give you the flexibility to pay for a variety of healthcare-related costs such as prescriptions, outstanding deductible or whatever your health insurance may not cover. A deductible can range anywhere between $500 and $2,500, a cost you may not be prepared for out-of-pocket.
You’ve likely heard of individuals having credit cards just for emergencies. This can be one of those emergencies. Having a credit card can allow you to have a higher deductible on your health insurance and ultimately lower your monthly health insurance premiums. Credit cards also offer you the flexibility to pay off pre-existing outstanding medical debt and consolidate to your card’s balance. Thus eliminating outstanding medical debt from your credit report. This may raise your utilization rate and lower your score temporarily, but making timely payments can quickly fix that.
Best Credit Cards for Medical Bills
The selection of credit cards catered towards paying for healthcare is limited. Fortunately, since credit cards allow you to make purchases for almost anything, you have the option to pay your outstanding healthcare bills with any credit card as most healthcare providers do accept credit card. Rather, a credit card for paying off medical debt should be chosen carefully based on features and your own health circumstances. If you’re looking to get a new credit card specifically for health bills, An ideal credit card to get for paying off health care related costs should offer the following:
Not every credit card is going to offer all of those features but these features can be highly beneficial in the event of an emergency.