Does Medical Debt Affect Your Credit Score?

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Does medical debt affect your credit score? It can, but you’ve got more time and options than ever before!

Yes, you read it right! Nothing can take you down — not even medical debt. Recent legal changes mean you have more time than ever to resolve medical debt. It won’t affect your credit report if you’ve got less than $500 in medical debt. Got bigger bills? You still have 365 days with all three credit bureaus to resolve the debt. 


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Can medical bills affect your credit?

First, the obvious: carrying thousands in medical debt for years will affect your credit score. However, how medical debt is treated has changed, so you have more time to sort out insurance or resolve the debt. 

Medical centers and hospitals don’t report to any credit bureaus, so the only way that medical bills will affect your credit is if they go unpaid for an extended period and end up in collections. If you’ve paid off the medical debt, or your insurance already covers it, you will not see it on your credit report.

In addition, due to changes that took effect in March 2023, how credit reports show medical debt has changed. All three credit bureaus — Equifax, Experian, and TransUnion — will not include paid medical debt that was in collections on consumers’ credit reports. 

Likewise, any medical debt of less than $500 won’t appear, even if it’s not paid. This gives you extra time, and if you can get your medical debt under $500, it will be cleared from your credit report entirely. 

You’ll also have more time to pay off medical debt before it appears on your credit report. The credit bureaus provide a 365-day waiting period before unpaid medical collections appear on your credit record. 

At that point, you’ll see medical collections on your credit report. It used to be reported after six months, giving you an extra six months to pay off medical debt before it hurts your credit score. 

What happens when a medical bill goes to collections?

When a medical debt goes to collections, it means it was sold to a collections agency, which is now responsible for collecting the debt. The debt collections agency may report the debt to one or more credit bureaus. The debt will only be registered as medical debt on your credit report one year after the account became late.

The yearlong grace period gives consumers more opportunities to resolve the debt, including working with insurance companies, negotiating a payment plan, or paying off the debt. If you have medical debt, even if it’s incorrect, you should contact the source of the debt to rectify it as soon as possible. 

How to get medical bills off your credit report

Disputing a medical bill on a credit report is a matter of persistence and attention to detail. First, if the bill is less than one year old or has been paid by insurance, it shouldn’t be on your credit report or negatively affect your credit score. If the debt still appears on the credit report, you should be able to dispute it with the credit bureau. Here’s how to get medical bills off your credit report. 

1. Double-check your credit report

The first step to rectifying your credit report is to know what’s there. Make sure the bill is still mentioned on your credit report. You can access your credit report for free at AnnualCreditReport.com.

2. Gather relevant documents

You’ll need to assemble proof that you paid your medical bill. Proof can include payment records, payment confirmation, credit card statements, a receipt, or any other confirmation you have. 

If the debt was paid by insurance, be sure to include the payment receipt or letter. You can also ask for payment records from your doctor’s office and get copies of checks or proof of deposit. The clearer documentation you have, the better it is. It helps a lot to clear the medical debt on your credit report.  

3. File a dispute

You will file a dispute with any of the three credit bureaus that report medical bills on credit reports. Be sure to check all three credit bureaus so you don’t get the debt wiped from one credit bureau, only to find it still being reported on another! 

4. Follow up

Legislation is in your favor to an extent. According to the Fair Credit Reporting Act, credit bureaus must follow up on credit reporting errors and disputes. Credit reporting agencies and information furnishers must investigate disputes from consumers about inaccuracies in their credit reports within 30 days. Keep the channels of communication open to keep the dispute on the table. 

Be ready to provide any additional documentation needed. Keep following up until the medical bills on your credit reports are resolved!

What do I do if my medical bill was wrongfully sent to collections?

If your medical bill was wrongly sent to collections, you can dispute it with the debt collections agency and the credit bureaus. When you receive a collection notice, you should contact them and provide the requested documentation to clear the debt. When cleared, that will also remove the medical bills on credit reports.

What should I do if I can’t pay my medical bills?

If you can’t pay your medical bills because you’ve received a bill you can’t afford, or your bills are already in collections, you have resources that could help. Here are possible actions you can take to get control of medical debt:

  • Negotiate directly: You always have the option to negotiate a payment plan or reduced rate with your health care provider. Talk to your doctor’s office or hospital about a discount for paying in full or a discount for noninsured patients. They might also let you make a down payment and pay the rest over time. If your bill is in collections, you can try to negotiate with the collection agency. They may be willing to work with you to create a resolution, since they most likely bought the debt much less than the full value.  
  • Get financial assistance: You might qualify for help from federal, state, or local financial assistance programs or nonprofit organizations. Some providers have income-driven hardship plans.
  • Get a medical billing advocate: A medical billing advocate will negotiate on your behalf with insurance companies and health care providers. Of course, you’ll have to pay for this service. But if they do their job well, you could save thousands of dollars by working with a reputable advocate. Check customer reviews to choose a good advocate. 
  • Borrow from family: You could borrow from a family member or friend to pay off the medical debt. Just be sure to have a clear repayment plan in place to avoid straining the relationship. 
  • Consider a 0% APR credit card: As a last resort, if your debt is an amount you could put on a credit card, and you’ve got a good credit score to get a new credit card, a 0% APR intro offer can be a solution. In that case, you can pay off the debt during the 12 to 18 months of the intro offer. However, make sure you have a clear plan to pay off the debt on time; otherwise, the high credit card APR can make the debt even more unmanageable. Remember that putting the medical debt on a credit card will convert it into regular debt, so it will start affecting your credit scores.

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Avoiding Medical Debt

No one plans for medical debt, so avoiding it is more a matter of layering protections for your family ahead of time. If you can get it, ensure you have good health insurance, including vision and dental insurance. If you don’t have insurance through work, consider getting Medicare or other government-assisted insurance. You can also consider a Health Savings Account (HSA), make a budget to save more each month or find some of the best savings accounts to start your emergency fund. With persistence and planning, you can deal with any medical debt you have now and protect yourself from future debt.  

FAQ

Is medical debt considered bad debt? 

Any debt can add financial strain and eventually affect your credit score. However, the effect of medical debt is usually less than that of other debt. For example, less than $500 debt won’t affect your credit score. The tips above can help you take control of medical debt. 

Does paying off your medical collections improve credit?

Yes, if the medical debt already appears on your credit report, paying off the medical debt should improve your credit score. If you still see the debt on your credit report, you can file a dispute with the credit bureau that’s showing the medical debt.

Why did my medical bill go to collections if I have insurance?

Your medical bill might go to collections even if you have insurance if the insurance hasn’t paid the bill. This can happen due to insurance limitations, copays, out-of-network providers, or because of miscommunication with the insurance company. Speak with your insurer to understand the situation and negotiate a solution. 

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