Do Medical Bills Affect Your Credit?

Dealing with medical bills can be stressful, especially if you're wondering if those unpaid bills may make it harder for you to get a loan or a credit card in the future. With 41% of Americans facing debt from medical or dental bills,¹ many find themselves with unexpected healthcare expenses and fear these costs may negatively impact their credit.

In this article, we'll help you understand how medical bills could affect your credit and offer tools to manage those bills and keep your credit healthy. Let's dive in and tackle this together so you can focus more on what matters most and less on financial stress.

What is medical debt?

Medical debt is any unpaid balance you owe for healthcare services, including hospital stays, surgeries, and prescriptions.

For example, if you receive surgery to fix a broken bone using your health insurance, part of that procedure may be covered under your insurance plan. The remaining balance is your responsibility to pay. If the balance goes unpaid, it is considered a medical debt.

How do medical bills affect your credit score?

Medical bills may impact your credit, but not immediately. Simply getting a medical bill in the mail doesn’t mean that you have medical debt or that your credit is affected.

Most medical providers don’t report bills to credit bureaus like lenders and credit card companies do.² However, they can sell the debt to a collection agency. On average, most providers wait at least 60 to 120 days past the due date before selling the debt to a collection agency.³ Once sold to a collection agency, medical bills may appear on your credit report as a new account. Since it impacts your payment history, an unpaid medical bill could damage your credit score significantly. Payment history is the most crucial FICO score factor, making up 35% of your score.⁴

The three credit bureaus — Experian, Equifax, and TransUnion — currently wait 365 days before placing unpaid medical collections debt on your credit report.⁵ This waiting period was added to help provide a predictable timespan for when and how medical debt is reported. This waiting period also gives you extra time to plan to pay off your debts using the tips discussed later in this article.

How long do medical collections stay on your credit report?

Most collections accounts stay on your account for seven years, including most medical bills in collections. But medical collections debt can be removed after being paid.⁶ You don’t have to wait the full seven years if you pay the debt.

Plus, medical collections debt under $500 no longer appears on credit reports.⁷ So, you may be able to pay down enough of your debt to stay under $500 and avoid credit damage, even if you can’t pay off the full amount right away. The Consumer Financial Protection Bureau is potentially removing medical bills from credit reports entirely.⁸

Regularly working on improving your credit score and using debt responsibly can help reduce the impact of collections actions, especially if you keep it up over time.

How to check if a medical bill is on your credit report

Each credit bureau provides you with one free annual copy of your credit report. Requesting your report lets you see if anything is negatively impacting your score, like collections activity, fraudulent accounts being opened or errors, so you can make a plan to address them.

You can also use free online credit monitoring tools to check your score and credit report anytime. Check with your bank or credit card lender to see if a credit monitoring tool is available through their app or online. At OneMain, our customers can monitor their credit score for free with monthly VantageScore® updates in their OneMain online account.⁹

It's important to note that info on the credit score appearing on the bank or lender’s site may differ slightly because they may use different scoring models than the credit bureaus. However, major actions like collections will eventually appear when the credit monitoring company gets the latest information.

How to remove medical debt from your credit report

As mentioned, medical collections debt over $500 stays on your report for seven years or until paid. It cannot be removed until the above criteria have been met.

Regularly checking your credit report helps you make sure that medical debt is removed at the right time. If a debt is on your report despite being under $500, paid off, or seven years have passed, you can dispute the charge to have it removed.

Before you dispute a charge, it's a smart move to get evidence that you paid the bill in full. This can include receipts, old credit card or bank statements, and other records. You may have to contact your medical provider for a copy of the receipt if you don’t have access anymore. Once you have this info, go to each credit bureau’s website and follow their process to file a dispute, providing information and evidence where needed.

Then, check the status of your dispute regularly and communicate with the bureaus if necessary. Keep following up until you confirm that the collections activity has been removed from your credit report.

Tips to manage and pay down your medical bills

If you have overwhelming medical debt, there are a few things you can do to help reduce it and hopefully make it more manageable. At the very least, you can pay it off over time and avoid having it go to collections while you chip away at the full amount.

Here are a few ways that may help make medical debt a little more manageable:

Double-check with your insurance company

Mistakes happen. Your insurance company may have overlooked certain coverage you’re entitled to, leaving you with medical bills that your insurance plan should have covered. Always be sure to look over your coverage and contact your insurance company to make sure they provide you with everything you pay for in your coverage.

Negotiate your medical bills

Reach out early to your healthcare providers to ask about negotiating your bill. They may be willing to offer different terms to help you pay your medical bills. For example, they may give a discount if you pay the entire bill at once. This approach may work if you have the cash available and can fit the bulk payment into your budget.

Another approach is to try and negotiate a payment plan. Your medical provider may be open to receiving part of the bill as a down payment and the rest as regular payments spread out over time. Or if you’re going through a hardship, like a job loss, your provider might offer a hardship-related payment plan.

If your bill is already in collections, you can often negotiate with the collection agency directly. These agencies buy debts at steep discounts, so they don’t need to collect the full debt to make a profit.¹⁰

Seek financial assistance

Some charitable organizations may be available to help with medical expenses. For example, some charities may provide free or discounted care to help people avoid medical debt or offer low-cost or free services to help them plan debt payoff. Some may also provide financial assistance if you meet their qualifications.

Similarly, government programs such as Medicaid and CHIP can help people who meet certain income levels to receive affordable healthcare for themselves and their children.

Safeguard your credit from medical debt

So, do medical bills affect your credit? The short answer is yes, medical bills can affect your credit score. But this usually only happens if you don't pay them, and they get sent to debt collectors. It's important to talk to your healthcare providers and insurance company, double-check your bills and set up payment plans you can afford. By taking these steps, you can handle your medical bills without letting them affect your credit. If you already have medical debt, you should consider making a plan and seek repayment assistance. OneMain offers fixed rate personal loans that might help you consolidate your medical bills into one manageable monthly payment. Check to see if you're prequalified for a debt consolidation loan today.

Sources:

1 https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs/
2 https://www.equifax.com/personal/education/credit/score/articles/-/learn/can-medical-debt-impact-credit-scores/
3 https://www.experian.com/blogs/ask-experian/can-paying-off-collections-raise-your-credit-score/
4 https://www.experian.com/blogs/ask-experian/can-medical-bills-affect-credit-report/
5 https://www.experian.com/blogs/ask-experian/medical-debt-and-your-credit-score/
6 https://www.transunion.com/blog/credit-advice/how-long-do-collections-stay-on-your-credit-report
7 https://www.cnbc.com/select/medical-debt-credit-report/
8 https://www.consumerfinance.gov/about-us/newsroom/cfpb-kicks-off-rulemaking-to-remove-medical-bills-from-credit-reports/
9 The VantageScore credit score is displayed for primary borrower only and is provided for educational purposes only. We do not guarantee that the credit score shown will be used by third parties to assess your creditworthiness or eligibility for any product or service or for employment.