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Medical debt remains on your credit report for 7 years—here's what that means for your credit score

Hefty medical bills are an easy way to fall into debt fast. CNBC Select finds out what it could mean for your financial health if you don't pay them off.

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The Chase Slate® is not currently available to new cardholders. Please visit our list of the best balance transfer cards and best Chase cards for alternative options.

It takes seven years for medical debt to disappear from your credit report. And even then, the debt never actually goes away.

If you've had a recent hospital stay or an unpleasant visit to your doctor, worrying about the credit bureaus is likely the last thing you want to do. But when faced with the choice between charging medical bills onto your credit card or letting them go unpaid, it's important to know what happens to medical debt if you don't pay it off immediately.

Below, CNBC Select gets advice from financial educator Thomas Nitzsche, of Money Management International, Inc (a 501(c)(3) nonprofit member of the National Foundation for Credit Counseling) about how long medical debt stays on your credit report and its effect on your credit score.

How long does medical debt stay on your credit report?

Once reported to your credit bureau, medical debt remains on your credit report for seven years, which is as long as any other collection debt.

Medical debt is not reported to your credit as long as it remains with your original service provider, but the moment it goes to collections, you'll likely see a ding on your score. Before that happens, you should ask a billing representative at your medical provider's office about financial aid and/or repayment plans to prevent any negligence from showing up on your credit.

"Once it goes to a collection agency (usually about 3 months past due), the credit bureaus must wait another 180 days before reporting it as past due," Nitzsche says. "This is a somewhat recent adjustment made to the rules due to the fact that sometimes it takes an extended period of time for insurance issues to be worked out."

If this is the case, check your credit report regularly (and for free) to help spot fraud and to ensure that the correct information is being reported to the credit bureaus. (About 25% of Americans have an error on their credit reports.)

Can't I just pay off my medical bills with a credit card?

Before choosing to use a credit card to pay your medical bill, make sure you have a plan for repaying the debt after it's charged. The last thing you want to do is add to the pain of medical debt by racking up interest on a credit card.

And if you are struggling with how to pay off your medical debt, consider moving it to a 0% balance transfer credit card. The Chase Slate® Credit Card offers a low introductory balance transfer offer: $0 fee during the first 60 days of account opening and 0% intro APR for the first 15 months from account opening (then 14.99% to 23.74% variable APR).

How does medical debt affect my credit score?

The short answer is that it depends.

"Most scoring models minimize the negative impact of medical debt versus other types of debt, but the problem is that you never know which scoring model a lender will use," Nitzsche says. "The best scenario is to keep it from ever reporting to the bureaus in the first place."

If it's too late and you've already overlooked a medical bill, it might go unnoticed depending on how large it was. Latest FICO and VantageScore credit scoring models give less weight to unpaid medical collections than to other types of collection accounts, such as credit card and student loan debt. And the most recent FICO scores also ignore collection accounts that have an original unpaid balance less than $100. 

While medical debt remains on your credit report for seven years, the three major credit scoring agencies (Experian, Equifax and TransUnion) will remove it from your credit history once paid off by an insurer. Remember that a credit report is an aggregation of your credit history, including detailed information such as your credit accounts, your payment history and your outstanding balances. The information from your credit report is summed up in your 3-digit credit score.

But still, with the many options there are to resolve medical debt, it's probably less scary to confront it than you think.

"In general, there are more options to prevent and resolve medical debt than other types of debt," Nitzsche says. "This can include financial aid from the service provider in a hardship situation, or settling with the collection agency prior to it negatively impacting your credit."

The bottom line? It's always best to ask.

Information about the Chase Slate® Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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