Sometimes, life just happens. We run into unexpected expenses that can put a serious strain on our bank accounts. Expenses like medical bills can’t always be avoided, but there are still consequences that come with not being able to cover these expenses. If you’re in the process of trying to buy a pre-owned vehicle and are also being trailed by medical bills, you might be worried about the potential impact on your credit score. We’re here to settle the matter.
Medical Bills vs. Medical Debt
Before we can really start talking about how medical bills could impact your credit, it’s important to understand the difference between medical bills and medical debt.
Medical bills are medical expenses that you are actively paying on. Let’s say you had a brief hospital stay and have received a bill in the mail. If you can pay it off all at once or are in the midst of a payment plan, then you’re simply dealing with medical bills. As long as you’re up to date on your bills and aren’t falling behind, these expenses are just that: another expense. Your credit score won’t be impacted as long as you stay on top of your payments.
If you start to fall behind, though, you could accrue medical debt. Once your providers notice that you’re missing payments, your bill is likely to head to a collection agency. While your provider likely won’t report to the credit bureau, your collection agency will. That’s when medical debt begins to show up on your credit report, which can have an impact on your overall score. Once that debt does appear on your report, it stays there for seven years.
Situational vs. Habitual Bad Credit
When you’re trying to buy or refinance a car, lenders look at your credit history. When they see that you have medical debt, they may take this as a sign of habitual bad credit, which is different from situational bad credit.
Situational bad credit is exactly what it sounds like: poor credit that has resulted from an unexpected situation. Lenders can look at your credit score and tell if you’ve had a temporary period of bad credit because of unexpected medical expenses or a job loss. Situational bad credit doesn’t have as much of an impact on your loan application as habitual bad credit.
As you can probably guess, habitual bad credit indicates that you’ve been dealing with a poor credit score for a while now. This point is worth repeating: once your medical bills go into collections and wind up on your credit score, you’ve already been missing payments for a while. Other signs of habitual bad credit include repossession or bankruptcy.
Even if you do have habitual bad credit, your dreams of buying a car are still achievable! You’ll just need to work with an experienced subprime auto dealer in San Diego, such as FA Financing, that is designed for those with unique credit situations like yours.
How Medical Expenses Can Impact Car Buying
If you’re paying your medical bills as you should be, these expenses won’t have any impact on your credit score or your ability to purchase a car. So, if you have a small medical expense or just a couple of bills to pay off, there’s no need to worry. Staying current on your payments will ensure your chances of getting a car loan are as high as possible.
If you do have medical debt, you can still purchase a car. Talk with your debt collector about any payment plans or consolidations that may be available to you. These compromises can make it easier for you to meet your monthly payments, reduce your medical debt, and increase your chances of getting a fair car loan.
Easy Ways to Improve Your Credit
Even beyond your medical expenses, there are other ways in which you can improve your credit. Every point counts, and it doesn’t take a ton of effort to see a significant difference in your score.
First, request your credit report. There are multiple resources online where you can request your report from all three of the top credit bureaus. Then, simply look through your report to make sure everything is accurate. If you notice any issues, reach out to the appropriate credit bureau to file a dispute. You could see a decent jump in your score through this step alone!
After that, the most important step to improving your credit score is by paying your bills on time. Along with your medical bills, make sure you’re paying other expenses (like your mortgage, rent, or utility bills) in a timely manner. If there are any bills that you’re struggling to pay, talk to your provider about alternative arrangements or payment plans.
Working with FA Financing
Increasing your credit score isn’t an overnight affair, but you can’t always wait to get a new car. That’s why there are specialty providers like FA Financing who are dedicated to helping clients get approved for an auto loan, regardless of their credit scores or history.
FA Financing has a huge network of lenders that specifically serve those with a rocky credit history. We can help clients who have had multiple auto loans, multiple repossessions, a recent bankruptcy, or trouble proving income. FA Financing works to polish your loan application to show off your entire portfolio, not just your credit score. By highlighting your strengths, you can have a much better chance of approval as well as favorable loan terms.
Getting started with FA Financing is easy. Simply fill out the application on our website to get a free quote. Once you’ve submitted a handful of documents, you’ll be given an instant decision. Then, you can browse our inventory to find some vehicles that interest you. We’ll take care of presenting your application to lenders and negotiating for the best terms. You don’t have to let medical debt or a low credit score prevent you from securing a great car. Contact FA Financing today to see how we can help get you on the road.
