I can't speak for today's financial world to much. But I can tell you my own personal experience with this kind of BS in my past from the early 1990's.
When my single sister applied for her first mortgage back in the early 1990's she had about $8K of unpaid medical bills on her credit report. All ER visits. (Actually, only three visits to the ER in all.) She had initially set up a payment plan with the hospital which they agreed to. Of course, when they showed up on her credit report as "past due" she questioned it, and the hospital basically just told her "that's how it works when you don't pay in full by the due date." Yeah, right. So she basically stopped paying it. Why bother if the unpaid portion is going to hurt your credit anyway, right?
Of course after a few months it went into collections, thus lowering her credit score even more. Then she went to apply for her first mortgage and was shocked/surprised at what the loan officer did upon pulling her credit.
Basically, the loan officer went line-by-line and put a big black line through "anything" medical. Then he refigured her credit score to something over 700, thus qualifying her for the loan. When asked why, this is basically what she was told.
Medical care is not an option. You ***HAVE*** to have medical care. If you or your child breaks an arm, they **HAVE** to go to the emergency room, and the doctors **HAVE** to deal with it. Not only by law, but by oath as a medical professional. At the time care is rendered, your ability to pay DOES NOT MATTER. If you show up to the emergency room with a 5 year old who broke their arm playing on the swings, no medical professional in their right mind is going to refuse care because you can't pay. it's not that kid's fault if you can't pay or not, and that kid shouldn't suffer because you can't pay. You *HAVE* to have medical care. Therefore, since all of her unpaid/uncollected medical bills on the credit report were all ER bills, the loan officer discarded them. Looking at her credit report, the ER bills were the "ONLY" bills not paid. All credit cards, car loans, bank signature loans, rent, etc, were "ALL" paid and paid on time. All of them. So the loan officer said it just wasn't right to allow the exhorbant cost of three ER visits to "hold her back" on the financial front. It was then that I learned almost all banks write off medical expenses on the credit report - unless of course, you have other things on the report that are in collections or behind on too.
Now if banks still do that today, I don't know. Lending laws have gotten more stringent over the last 20 years, so those unpaid ER visits very well may matter to a lender in today's world. You'd have to talk with someone in the lending business, such as the loan officer at your local bank or credit union, to find out if those ER expenses will matter or not, to that lender. They may matter. They may not. But you won't know until you ask.
