How Does Medical Debt Affect Your Credit Score?


Medical debt is an unfortunate reality for millions of Americans. As healthcare costs continue to rise, it becomes increasingly important to understand the financial implications of medical debt and its impact on your credit score.

This article explores the topic of medical debt and provides you with strategies to manage and minimize its effects on your credit score.

women paying medical bills

How Medical Bills Affect Credit Scores

Unpaid medical debt can have a significant impact on your credit scores, especially when it becomes delinquent or goes to collections. Here are some key points to consider:

  • The role of medical debt in credit score calculations: Medical bills, like other types of debt, factor into your credit score calculations. Late or missed payments and unpaid bills can lower your credit scores, making it more challenging to obtain loans, credit cards, or favorable interest rates.
  • Late payments and unpaid medical bills: Late payments on medical bills can be reported to the three major credit bureaus, which may negatively affect your credit scores. If unpaid, medical bills can eventually be sent to collections, further damaging your credit.
  • Impact of medical debt on different credit scoring models: Unpaid medical debt can affect your credit score differently, depending on the credit scoring model being used. For example, newer credit scoring models like FICO Score 9 and VantageScore 4.0 give less weight to medical debt compared to other types of debt, while older models treat medical debt more harshly.

The Medical Debt Collection Process

Understanding the medical debt collection process can help you take control of the situation and potentially minimize its impact on your credit scores.

  • How medical debt becomes a collection account: When a medical bill remains unpaid for an extended period, the medical provider may sell the debt to a collection agency. The collection agency then reports the debt to credit bureaus, which can cause a significant drop in your credit scores.
  • The role of collection agencies: Collection agencies are responsible for recovering unpaid medical debts. They may contact you through phone calls, letters, or even legal actions to collect the outstanding balance.
  • Statute of limitations on medical debt: The statute of limitations for medical debt varies by state, ranging from three to ten years. This is the time frame within which a collector can sue you for the unpaid debt. It’s important to know the statute of limitations in your state, as it can help you strategize your approach to dealing with unpaid medical debt.

Medical Bills Grace Period and Reporting

A grace period can provide some relief when dealing with medical bills, but it’s crucial to understand its impact on credit reporting.

  • How grace periods work with medical bills: Some medical providers may offer a grace period, typically 30 to 180 days, during which they will not report late or missed payments to credit bureaus. This gives you time to resolve any disputes, work with your health insurance company, or make arrangements to pay the bill.
  • Impact of grace periods on credit reporting: Even if your medical provider offers a grace period, it’s essential to pay your medical bills promptly. Once the grace period ends, late payments can be reported to credit bureaus, negatively impacting your credit.
  • Changes in medical debt reporting rules: Recent changes to credit reporting rules have made it more difficult for medical debt to impact your credit scores. These changes include a 180-day waiting period before medical debt can be reported to credit bureaus and the removal of medical collections paid or settled by insurance.

Can medical bills be removed from my credit report?

If you believe a medical collection on your credit report is inaccurate or unfair, you are entitled to dispute it. To dispute a medical collection, you’ll need to contact the credit bureau reporting the debt and provide supporting documentation to prove that the collection is inaccurate or unjust.

First, you’ll need to gather all relevant documents, such as medical bills, insurance Explanation of Benefits (EOB), payment records, and any correspondence with the medical provider or collection agency. This evidence will help you build a strong case when disputing the collection.

Then, once the credit bureau receives your dispute, they typically have 30 days to investigate the matter. If the dispute is resolved in your favor, the medical collection will be removed from your credit report, which may result in a boost to your credit score.

Does paying off medical collections improve my credit?

Paying off medical collections can have a positive impact on your credit, but the extent of the improvement depends on various factors.

  • The importance of paying medical debt: Paying off medical debt shows financial responsibility and can help prevent further damage to your credit.
  • How payment history affects credit scores: Your payment history makes up a significant portion of your credit score calculation. Settling medical debts can have a positive effect on your payment history, potentially improving your credit.
  • Settling medical debt for less than the full amount: In some cases, collection agencies may be willing to accept a lower amount to settle the debt. While this can help you save money, keep in mind that the partial payment may still be reported to credit bureaus, which could have a less favorable impact on your credit score compared to paying the debt in full.

Strategies for Managing Medical Bills

Effectively managing your medical bills can help prevent them from damaging your credit scores.

  • Negotiating medical bills with healthcare providers: Before a bill goes to collections, you may be able to negotiate with your healthcare provider to lower the cost, set up a payment plan, or request financial assistance.
  • Repayment plans and options: Many medical providers offer payment plans that allow you to pay your medical bills over time. This can make it more manageable to handle large medical expenses without hurting your credit scores.
  • Hiring a medical billing advocate: A medical billing advocate can help you review your medical bills for errors, negotiate with medical providers, and even guide you through the insurance claim process.
  • Seeking financial assistance and grants: Look for financial assistance programs, grants, or charities that may help cover the cost of your medical bills. Some hospitals and clinics also have programs for eligible patients.
  • Weighing the pros and cons of personal loans or credit cards: Using personal loans or credit cards to pay off medical debt can be an option, but consider the potential impact on your credit scores, as well as the interest rates and fees associated with these forms of borrowing.

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

You have certain rights under the Fair Debt Collection Practices Act (FDCPA), which protects you from abusive or deceptive debt collection practices. Make sure you understand your rights and options when dealing with medical debt.

Keep an open line of communication with your medical provider and debt collectors. Discuss your financial situation, ask for assistance, or negotiate a payment plan to help manage your medical bills.

In extreme cases, bankruptcy may be a viable option to address overwhelming medical debt. However, it’s essential to consider the long-term implications, as bankruptcy can have a significant and lasting impact on your credit.

Preventing Medical Debt from Damaging Your Credit

Taking a proactive approach to managing medical expenses can help protect your credit score. Review your medical bill and insurance statement carefully for errors, and address any discrepancies promptly. Keep track of due dates and submit insurance claims as soon as possible to avoid late payments or collections.

Maintaining a record of your medical expenses can help you budget effectively and ensure you don’t miss any payments. Consider using financial management tools, apps, or a simple spreadsheet to stay organized.

You should also regularly review your credit report for any inaccuracies. By catching errors early, you can dispute them and potentially prevent damage to your credit score.

Keeping Your Credit Score Healthy

Some strategies for maintaining a healthy credit score include making timely payments on all your debts, keeping your credit utilization low, and diversifying your credit mix by using different types of credit responsibly.

Establishing a solid credit history takes time and consistent effort. By using credit responsibly, making timely payments, and avoiding high levels of debt, you can build a strong credit history that will serve you well in the long run.

Having a financial plan and an emergency fund can help you handle unexpected medical expenses without relying on credit, which could negatively impact your credit. Aim to save at least three to six months’ worth of living expenses in an emergency fund.


Unpaid medical debt can have a substantial impact on your credit, but understanding how it works and taking proactive steps to manage it can help you minimize its effects. Stay on top of your medical expenses, communicate with medical providers and debt collectors, and maintain a healthy credit score by following the strategies outlined in this article.

Remember, your financial health is just as important as your physical health, and taking control of your medical debt is a crucial step toward financial well-being.

Frequently Asked Questions

What happens when medical debt is sold to a collection agency?

When medical debt is sold to a collection agency, the agency becomes responsible for recovering the unpaid debt. They may contact you through phone calls, letters, or even legal actions to collect the outstanding balance. The collection agency also reports the debt to credit bureaus, which can cause a significant drop in your credit score.

What are the consequences of unpaid medical collections over $500?

Unpaid medical collection accounts over $500 can stay on your credit reports for up to seven years and have serious consequences, such as:

  • Significant damage to your credit score
  • Difficulty obtaining loans, credit cards, or favorable interest rates
  • Potential legal actions or wage garnishments
  • Increased stress and financial burden

It’s crucial to address unpaid medical debt promptly to minimize these consequences.

What should you do if you can’t pay a medical bill on time?

If you can’t pay a medical bill on time, consider the following options:

  • Communicate with your medical provider about your financial situation and ask for assistance or a payment plan.
  • Explore financial assistance programs, grants, or charities that may help cover the cost of your medical bill.
  • Negotiate with the medical provider to lower the cost or set up a payment plan.
  • Hire a medical billing advocate to help you review your bills and negotiate with the medical provider.

How can you negotiate medical bills?

To negotiate medical bills, follow these steps:

  1. Review your bills and insurance statements for errors or discrepancies.
  2. Research the average cost of the medical service in your area.
  3. Prepare a case, explaining why you believe the bill should be reduced.
  4. Contact your medical provider’s billing department and discuss your concerns.
  5. Be prepared to provide documentation and evidence to support your case.
  6. Remain polite and persistent throughout the negotiation process.

How can I get medical bills off my credit report?

To get medical bills off your credit report, the first step is to review your credit report for inaccuracies and verify the legitimacy of the medical collections listed. Inaccurate or unjust collections can be disputed, and if the dispute is resolved in your favor, the medical debt will be removed from your credit report.

To dispute a medical collection, contact the credit bureau reporting the debt and provide supporting documentation, such as insurance Explanation of Benefits (EOB), payment records, and any correspondence with the healthcare provider or collection agency. The credit bureau typically has 30 days to investigate the dispute, and if successful, the medical collection will be removed, potentially improving your credit score.

Another approach to getting medical debt off your credit report is by negotiating a “pay-for-delete” agreement with the collection agency. In a pay-for-delete agreement, you offer to pay the outstanding medical debt in exchange for the collection agency removing the collection from your credit report. This strategy, however, isn’t always successful, as collection agencies are not obligated to agree to such terms.

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