How Medical Debt Can Impact Your Credit Score

How Medical Debt Can Impact Your Credit Score

How to improve credit score

Eduardo Monroy

January 31, 2023
How Medical Debt Can Impact Your Credit Score

Injuries, illnesses, or surgeries can result in unexpected medical bills. While health insurance may help some of you, many people still struggle to pay medical bills alongside managing their day-to-day expenses and making ends meet. 

According to Equifax, most healthcare providers do not report to the three main credit bureaus (Experian, Equifax, and TransUnion), meaning most medical debt is generally not included on credit reports and does not factor into credit scores.

Though, if you’ve failed to pay your dues, a healthcare provider may turn your account over to a collection agency that may report the information to the credit bureaus after a waiting period of 180 days. 

If you are worried about your medical bills harming your credit score, it is best to determine whether and how they’ll impact your credit report so that you can take appropriate action with the help of credit repair services.

Here are different ways to examine how unpaid medical bills can impact your credit score.

The risks of ignoring medical bills  

Despite maintaining good health insurance and making the effort of picking the finest in-network doctors and hospitals, medical bills can still rack up quickly and affect your credit standing. A simple visit to the ER can turn into a large debt if you are uninsured.

Don’t get caught up thinking that acquiring medical bills will automatically spell trouble for your credit reports and score because it’s a myth. As mentioned earlier, it’s not the doctors or the hospitals you visited who report your medical bills to the credit bureaus. 

Medical providers will generally turn over your unpaid bills to a debt collection agency in an attempt to collect fees from you for a few months and the debt collector, in turn, reports it to the credit bureaus. 

Therefore, it’s only the unpaid medical debt that can impact your credit health as they turn into collection accounts. Besides, they can lead to court judgments if your debt collector decides to sue you over delinquent medical bills, which will reflect on your credit report for seven years.

Hence, you shouldn’t risk ignoring your medical bills that can show up on your credit report. How much damage they can cause will depend on other score factors from your credit report.

Medical collections (and credit scores)

Many believe that medical collections aren’t a big deal because no one intentionally wants to get into medical debt. But it’s alarming to see the results of a survey showing a staggering 52% of collection accounts on credit reports are medical bills. An estimate shows that 43 million consumers with a credit report have at least one medical account in collections.

Credit scores are the least resistant. This means it is fairly easy for a good credit score to turn into a bad one than it is for a bad credit score to turn into an awful one. 

Here’s an example to clarify this further. The addition of medical collections may potentially hurt your credit score if you currently have a very good credit score. But if you already have derogatory information appearing on your credit report, then one more medical collection may not have an additional negative impact on your credit score.

New regulations may give you a breather

FICO scores initially considered medical collection bills like any other collection account. Fortunately, after an agreement between the three credit bureaus and a group of the state attorney general, there’s a new set of rules released by VantageScore and FICO. 

The new scoring models, FICO Version 9 and VantageScore 4, in effect since June 2018, have made it difficult for medical debt to slow down your ability to borrow money. 

Collection agencies can no longer report medical collections to credit bureaus before waiting for 180 days. The new regulations also require collection agencies to remove any medical bills paid by your insurance companies from your credit report. 

This 180-day buffer is indeed good news for you to make payments or arrange payments with your insurance company before it goes for collections. If you aren’t sure how to identify unfair or negative items that may be hurting your credit score and raise disputes, take the help of professional credit repair service providers such as Cool Credit.

Reality check

This new FICO scoring system will cause fewer credit score problems and may make your life a little easier to deal with medical debt, but you shouldn’t forget that some lenders still use the older versions of credit scores. There’s a likelihood that creditors will view a medical collection account negatively when applying for credit, insurance, or loan as medical debt.

If you’re facing mounting medical expenses, consider these points that may help prevent medical bills from appearing on your credit report. 

  • Contact your health insurance company, know about your coverage, and follow up to make sure it is paying costs it has agreed to cover.
  • Negotiate with your health provider if you can’t pay a bill. Request to reduce the amount you owe or set up a payment plan.
  • Contact the medical provider or collection agency first if you believe medical debt has been listed on your credit report by mistake. You can also file a dispute with the three credit bureaus on your own or through Cool Credit, which has a team of professionals to take care of it all for you.  
  • It is best to prepare for medical procedures in advance by learning what your insurance will cover and what costs you’ll have to handle.

These preventive steps may seem time-consuming and somewhat inconvenient, but they’re better than experiencing another blow to your credit score.

Final thoughts

It is a good idea to review your credit report from time to time since it helps ensure the information is accurate and complete. If you didn’t already know, you’re entitled to a free copy of your credit report every 12 months from each of the three major credit bureaus.

Visit to learn more about how they’ll continue to fight on your behalf to remove existing negative items appearing on your credit report.

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