How Does Medical Debt Affect Your Credit Score?

Through April 20, 2021, Experian, TransUnion and Equifax will offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com to help you protect your financial health during the sudden and unprecedented hardship caused by COVID-19.

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Medical care is obviously an important part of staying healthy, but costly medical bills can cause your bank account to suffer. Four in 10 Americans with employer-sponsored health insurance had problems paying medical bills last year, the Kaiser Family Foundation reports. In a survey by The Commonwealth Fund, 40% of adults who struggled to pay medical debt say their credit rating has suffered as a result. Medical debt can negatively impact your credit score because by the time it shows up on your credit report, the debt has already gone to collections. Having an account in collections can seriously affect your credit score even if you are actively making payments on the debt.

Do Medical Bills Hurt Your Credit?

Medical bills will not affect your credit as long as you pay them. However, medical debt is handled a little differently than other types of consumer debt. Since most health care providers don’t report to credit bureaus, your debt would have to be sold to a collection agency before appearing on your credit report. Most medical providers won’t sell the debt to a collection agency until you are 60, 90 or even 120 days or more past due. Exactly when that happens depends on your health care provider.

Even after your bill goes to collections, the account won’t show up on your credit report right away. The three main consumer credit bureaus—Experian, TransUnion and Equifax—give you a 180-day waiting period to resolve any medical debt before the collection account appears in your credit history, so medical bills won’t impact your credit score right away.

Credit bureaus provide this grace period because medical bills are a unique type of debt. Even if you have health insurance and the bill is for a covered expense, you may have to wait months for your insurance company to approve and issue payment to the health care provider. A simple coding or billing error can slow the payment process even more. The 180-day grace period gives you some time to correct any errors and gives the insurance company’s payment time to make its way through the system. It also gives you time to set up a payment plan, if necessary.

This doesn’t mean you should ignore a medical bill. Unpaid medical bills may take a long time to show up on your credit report, but the damage to your credit score can be long-lasting once they do. Unpaid medical bills can remain on your credit report for seven years after they become delinquent.

Quick action is key to preventing a medical bill from damaging your credit score. As soon as you get a medical bill, review it to make sure it’s accurate. Contact your insurance company and health care provider to resolve any problems; follow up vigilantly until you know the bill has been paid. If the bill isn’t covered by your insurance and you’re afraid you’ll have trouble paying it, talk to your health care provider to see if you can work out an alternative solution. If your medical bills are overwhelming, you may look into getting help from a medical billing advocate or financial assistance from a charity or government program (more on that later).

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Can Medical Bills Be Removed From My Credit Report?

Medical billers and insurance companies make mistakes, and criminals may steal your identity to get medical care. If you have medical collections on your credit report that are not accurate or are the result of fraud, you can dispute them with the credit bureaus. If the dispute is settled in your favor, the accounts can be updated or removed from your credit report.

These disputes are free to file, and will need to be filed separately with each bureau that lists the incorrect information. Be prepared to provide evidence of your claim. For example, you might need records from the collection agency, insurance company or health care provider, copies of canceled checks, or a credit card statement showing that the bill has been paid.

Does Paying Off Medical Collections Improve Credit?

It’s always best to pay off legitimate medical debt. When you or your insurance company pay off a medical bill that was in collections, the account will be updated to show it has been paid. That can have an immediate positive impact on your credit, but it won’t necessarily boost your scores. Why?

FICO® 9, the newest FICO® credit scoring model, and VantageScore® 3.0 and 4.0, the newest VantageScore credit scoring models, ignore collection accounts that have been paid, so when your medical debt is paid off, these scores may improve. (Even before the account is paid off, these three credit scoring models weigh medical collections less heavily than other types of collections.)

Older versions of credit scoring models are still commonly used, however, and they do typically continue to factor paid collections into your scores. If the lenders you plan to do business with use an older credit score model, paying off your medical debt may still improve your chances of being approved for credit, even if it doesn’t increase your credit scores. That’s because a paid collection account is typically viewed more favorably than an unpaid one. However, since there’s no way to be sure which credit scoring model a lender uses to evaluate your creditworthiness, your best strategy is to never let a medical bill get to the collections stage.

What to Do if You Can’t Pay Your Medical Bills

If you know you won’t be able to pay off medical bills on time, don’t panic. One of the following options may solve your problem.

  • See if you can negotiate your medical bills. Health care providers are often willing to work with you because they’d rather get some of what they’re owed than get nothing at all. For example, some providers offer substantial discounts if you agree to pay a lower amount in full, or if you make a large down payment and then pay the rest over time.
  • Try to work out a repayment plan. Your health care provider may be willing to break the bill down into monthly payments, which can make it more manageable for your budget. Just be aware that any interest or fees the provider charges will add to the cost of the original bill.
  • Hire a medical billing advocate. Medical billing advocates work with health care providers and insurance companies to help resolve medical bills on behalf of individuals. The service isn’t free, but it can be worth the cost. A medical billing advocate can save you thousands of dollars, not to mention hours of time on the phone with insurers and provider offices.
  • Find out if you qualify for financial assistance. Depending on your income, you may be able to get help paying medical bills from Medicaid, local or state programs, religious groups or nonprofit organizations, and charities.
  • Use a personal loan or credit card. These should be your options of last resort, as you’ll incur interest on the amount you borrow or charge. Don’t get a loan secured by your home or other assets; you could lose them if you default. If you plan to use credit, a card with a lengthy 0% APR introductory offer on purchases can provide extra time to pay off your medical debt without paying interest—but make it a goal to pay off the debt before the higher rate kicks in.
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Keep Your Credit Score Healthy

As time goes by, a medical collection account will have less and less impact on your credit score, until it ultimately drops off your credit report. Even if you have a collection account on your credit report, there are still things you can do to improve your credit score. Make all your debt payments on time, keep your credit card balances low, and avoid applying for new credit unless you really need it. Keep an eye on your credit by periodically checking your credit report and score. Pay close attention to your credit score risk factors so you can make changes that will help improve your scores.

Reviewing your credit report regularly will help you spot any medical debt that has gone to collections or any fraudulent use of your credit. You can get a free copy of your credit report from all three credit bureaus through AnnualCreditReport.com. Once the medical debt is paid off, make sure your credit report shows the account as paid. When your credit score is on the road to recovery, keep tabs on its health by setting up free credit monitoring.


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