Will medical bills have an impact on my ability to buy a car?
Medical debt can affect your credit score, which is a key part of buying a car. Your credit score can determine many aspects of buying a car, including how much you’re eligible for and the type of lender you can work with.
Medical bills vs medical debt
The moment medical bills appear on your credit reports your account is already in collections. Collection accounts can cause lasting and significant damage to your credit score. Medical providers usually report you to a collection agency after your payments are 60, 90, or 120 days past due. The time varies depending on the supplier.
The medical bills that you actively pay, which stay up to date, have no impact on your credit reports or your score because medical providers do not report to the credit bureaus. However, once you start to miss payments, the bill has a chance of ending up with a collection agency, becoming a medical debt that gets reported.
The three major credit bureaus – Experian, TransUnion, and Equifax – have an extra layer of protection against medical debt that hurts your credit rating. They each provide a 180-day waiting period before any medical debt shows up on your credit reports, giving you more time to make payment arrangements or pay the bill.
Debts that show up in collections on your credit reports stay there for seven years.
What does this mean for the purchase of cars?
Borrowers with a credit score of around 670 and below likely have to work with different lenders than those with higher credit scores. Traditional (or direct) lenders like banks, credit unions, and some online lenders generally only work with borrowers who have good credit.
If you have a bad credit rating, you will likely need to work with a special funding dealer who is equipped to handle difficult credit situations. Having medical debt reported on your credit may be a sign of usual bad credit, and can be a red flag for many lenders.
Typical bad credit is signaled by things like missing or late payments on your credit reports or other significant negative marks on your credit reports, such as past bankruptcy or repossession. These signs differ from that of situational bad credit, such as job loss or unforeseen medical expenses, and lenders can tell the difference.
Clean up your credit to get a car
If you usually have bad credit or medical debt that impacts your ability to get a car loan, you still have options. Perhaps your best chance to start repairing your credit is to start paying all of your bills, medical or otherwise, on time.
Payment history is the most important factor in building your FICO credit score, 35% of it. It’s also a good idea to get a copy of your credit reports and your score so that you can see what lenders are seeing. You can get a free copy of your credit reports until April 20, 2022 from all three credit bureaus by visiting www.AnnualCreditReport.com.
If you find that there are any errors or accounts that you do not recognize, you have the right to dispute the errors with the credit bureaus. In most cases, you can do this online. If you find that your credit reports need more repairs than you have the time, you can also try repairing your credit reports through a third party. credit repair company.
Find the right lender to help you
Credit repair can take a long time, and sometimes you can’t wait to get another vehicle. If you have bad credit due to medical bills or anything else, don’t despair. There are lenders available to work with you through Special Funding Concessions, and we know how to help you find them.
AT Auto Express Credit We have built a nationwide network of dealers who are registered with supreme lenders ready to help borrowers with less than perfect credit. To get started hassle-free, simply complete our quick, free, auto loan application form, and we’ll immediately get to work to find a dealer in your area.