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Does Medical Debt Affect Your Credit Score?

If you’re dealing with a medical emergency, the last thing you want to worry about is whether seeking essential care will result in medical bills that hurt your credit score. However, the reality is that medical debt may impact your credit score and make it hard for you to qualify for loans in the future.

When you understand how medical debt can impact your credit, you’re better able to manage the potential impacts of medical bills — even if you can’t avoid them altogether. 

Does Medical Debt Affect Your Credit Score?

The 9% of Americans with some form of medical debt need to know how medical debt impacts credit scores. So does anyone who may join them in the future.

Most healthcare providers don’t report to the major credit bureaus, Equifax, Experian, and Transunion. That means medical debt doesn’t impact your credit score right away. However, if they sell your debt to a collections agency because you fail to pay the debt, it may show up on your credit reports and start damaging your credit score.

How Medical Bills Impact Your Credit

The good news for people needing healthcare is that medical bills don’t impact your credit so long as you pay them. If you get a bill and you or your health insurance company pay it before its due date, it won’t show up on your credit report at all. That means lenders won’t see the medical bill.

However, if you fail to pay the bill, it turns into medical debt, which can start affecting your credit. Most healthcare providers will eventually sell your medical debt to a collections agency. These debt collectors buy debt below its face value, then try to collect from the people who owe that debt.

Typically, having an account in collections means a big drop in your credit score. However, the three major credit reporting agencies offer some respite if you have medical collection accounts. They won’t start putting the information on your credit report until 180 days have passed, giving you time to pay your unpaid medical bills before they start damaging your credit.

Once the medical collection debt shows up on your credit, your score will likely drop. The size of the decrease will depend on the credit scoring models used to determine your credit score. Some models treat medical expenses that hit collections like any other debt while some will be more lenient due to the nature of the debt. 

For example, VantageScore gives less weight to these types of collection accounts. Newer FICO formulas ignore them entirely after you’ve paid them.

If your medical debt shows up on your credit report and you pay it back, it can help your credit score but may not eliminate the impact of the collections account on your score.

Upcoming Changes to Medical Collections Credit Reporting

Credit scoring agencies and lenders are constantly iterating on credit scoring formulas to make them more accurate and fair for both lenders and consumers.

One upcoming change is that newer FICO and VantageScore formulas will ignore paid medical debts, removing the impact they have on your credit. That means that if you let a medical bill go to collections but later paid it off, it will be like the bill never went to collections at all. Some formulas will completely ignore small medical bills, paid or unpaid.

These changes are set to go into effect on July 1, 2022. However, some politicians and lenders are pressuring the Consumer Financial Protection Bureau (CFPB) to encourage credit agencies to delay or stop this change. They argue that it’s unfair to lenders who may make incorrect assessments of borrowers’ creditworthiness.

How to Prevent Medical Debt From Hurting Your Credit

If you’re facing medical debt, consider taking these steps to prevent it from affecting your credit history.

Carefully Review Invoices & EOBs

When you get medical care, you should receive invoices from the healthcare provider. If you have health insurance and the provider filed a claim on your behalf, as is usually the case, you should also receive an explanation of benefits (EOB). 

The invoice describes the amount that the hospital charged and what the charges are for. The EOB comes from your insurance provider and describes what costs it has covered.

Review the itemized bill to make sure that it accurately describes the care you received. Hospitals can make mistakes and may bill you for care you didn’t receive. 

Then, look at the EOB to see if your insurance refused to pay for certain charges. Use this information to prepare for costs that you might have to cover.

Negotiate With Providers

If you don’t have insurance, or your insurance won’t cover certain parts of your healthcare costs, you might not have to pay the sticker price for your care.

Talk to your healthcare provider’s billing office and try to negotiate. Many providers charge incredibly high amounts, expecting insurance agencies to settle those charges for much less. For example, they might charge $500 for a service that they expect to get paid $100 for.

If you negotiate with your provider, they might be willing to significantly reduce the amount of your bill.

Work Out a Payment Plan

If you still can’t afford to pay the full cost of your medical care upfront, talk to the care provider about setting up a payment plan. Many providers are fine with this, so there’s a good chance you’ll be able to convince yours to accept monthly payments or some other payment plan until your debt is paid in full.

Contact a Medical Billing Advocate

Medical bills can be complicated. Even if your bill is itemized, you might not fully understand what you’re looking at.

Consider working with a medical billing advocate — someone with experience in dealing with medical bills and helping patients deal with the cost of healthcare. A medical billing advocate can be a hired professional or volunteer.

You can search online or in your local area for an advocate who can help you. If you’re covered by Medicare, you can also contact your State Health Insurance Assistance Program. You can expect to pay as much as $100 an hour or pay a percentage of the amount the advocate saves you if you wind up working with a paid service.

Your advocate will go over your bill with you and help you understand each piece of it. They can also help you work with your insurance agency to get all of the benefits you deserve, especially if your insurer is refusing to cover certain parts of the bill. And they can assist in negotiations with the healthcare provider or help you set up a payment plan too.

Check Your Credit Report Regularly

Even if you don’t have any issues with your credit, it’s a good idea to keep a close eye on your consumer credit reports. This gives you the chance to review your credit history and see anything that is negatively impacting your score.

The best way to check your credit report is using This is a government-authorized site where you can get a copy of your credit report from each of the three major consumer credit bureaus. You’re entitled to one free copy of your report from each credit bureau per year.

You can use other free services to view your credit report too. And many credit card issuers offer regular updates on your credit score and the factors that impact it.

Dispute for Any Credit Report Errors

When reviewing your credit report, you might find mistakes on it. It could be a record of a missed payment that you didn’t miss or even an account that does not belong to you.

Credit bureaus have processes for disputing these errors. If you catch an erroneous medical debt on your report, reach out to the medical provider. They might be able to remove the information from your credit report. If they’re unwilling or unable to help, you can dispute it with the credit bureau directly. Removing these errors could significantly boost your score.

Keep Your Credit Score Healthy Moving Forward

Maintaining good credit requires constant effort. But it’s the best way to ensure you’ll qualify for credit at a competitive interest rate when you need it.

The most important things you can do to keep your credit score high are to always make your payments and only borrow money when you need to. Put together, your payment history and your overall debt account for two-thirds of your credit score, so focusing on these factors is the best way to help your credit.

Final Word

Your credit score might be the last thing on your mind when you’re dealing with a medical emergency. However, once you get the bills for your care, you need to figure out how to pay them before they negatively impact your credit score.

This is important if you have any plans to apply for credit — perhaps an auto loan or mortgage — in the near future. So by preventing medical debt from negatively impacting your credit, you’re more likely to stay on track to meet your long-term financial goals. 

TJ is a Boston-based writer who focuses on credit cards, credit, and bank accounts. When he's not writing about all things personal finance, he enjoys cooking, esports, soccer, hockey, and games of the video and board varieties.