How Can Medical Bills Affect Your Credit History?

When you get hurt or need medical assistance, the last thing on your mind should be the cost and any debt you might take on — especially since medical treatments and healthcare are not optional. After all, the well-being of you and your loved ones is second to none.

But the hefty ensuing costs are a big problem with modern healthcare — especially in an emergency, like an injury, surgery, or severe illness.

And the impacts don’t end there. You may wonder whether medical bills can affect your credit. Unfortunately, unpaid medical bills can and will appear on your credit report, which may harm your financial health. So, how do you prevent this?

What is medical debt?

Medical debt is any form of debt or bill related to healthcare, from routine doctor’s visits to emergency and intensive care visits. Health insurers may cover some of your medical expenses, but you may still owe more based on your deductible or the use of goods and services your insurance doesn’t cover.

You’ll need to catch up on bills to avoid incurring debt or delinquencies.

How do medical bills affect your credit? 5 FAQs

Medical debt and medical bills can lower your credit score, but there are limitations.

Most medical providers will not report a debt to credit bureaus, but they can send it to debt collection agencies seeking to recover the money. That might affect your credit score. But there have been recent changes to how medical debt affects your credit.

Here are answers to some common questions about the effects of medical debt on credit:

1. Do medical bills go on your credit report?

As of January 2023, VantageScore 3.0 and 4.0 models — your collective credit score across the three major credit bureaus — no longer factor in medical collections when calculating your credit score. (Yay.)

The credit reporting agencies also increased the time that unpaid medical debt takes to show up on a credit report from six months to a year, giving you an extended grace period to pay off those debts before they affect your annual credit report.

In addition, debt under $500 will not show up on a credit report. That said, you still need to pay off those smaller debts, even if they don’t appear on your report.

2. How long does medical debt stay on credit reports?

Unpaid medical debt can stick around on your report for up to seven years. Fortunately, paid-in-full medical collection debts will no longer appear on consumer credit reports like Equifax or Experian.

3. How much does medical debt collection affect your credit score?

Medical debt that shows up on your credit report can bring down your credit score by up to 100 points. That makes getting approved for a loan, getting a new credit card, or negotiating with financial providers a lot more challenging. You’re less likely to be approved for a home loan or mortgage with lingering debt. Landlords can also refuse you as a tenant for unpaid debts.

You can stay up-to-date with your credit report using a credit monitoring tool.

4. When will medical debt be removed from a credit report?

The Nationwide Credit Reporting Agencies (NCRAs) announced in April 2023 that any medical debt with an initial balance of less than $500 would be removed from credit reports, and any further debts of this size wouldn’t appear. That rule also applies to medical debt collections that have been turned over to a collection agency.

Unfortunately, anything more significant will still appear on a credit report.

5. Is it a HIPAA violation to send medical bills to collections?

Debt collectors and health care providers have the right to collect on delinquent debts.

Collection agencies must sign a HIPAA Business Associate Agreement, which requires them to protect your privacy when handling medical debts and information. There is only so much they can know and share, like your payment history, name, and personal details. They cannot view or share any information about your medical history, confidential medical reports, or any treatments you’ve received, including medications.

Removing medical bills from a credit report

Medical bills on credit report listings will be removed after they have been paid in full or if they are successfully disputed.

In rare cases, medical billers, insurance companies, and debt collectors make mistakes and misreport events. Alternatively, a criminal can steal your digital identity and take out several credit cards in your name. This is when you would want to dispute unauthorized transactions made under your name.

As with all financial accounts, you can dispute medical debt with credit bureaus. The good news is that it’s free; the bad news is that it’s quite an involved process. You must file a dispute with each bureau that lists the information on your report.

You may also reach out after paying the debts in full, but you will need proof, like a recent statement, screenshots of payments, or copies of canceled checks.

Paying off debts, especially ones that are late or overdue, will eventually lead to an increase in your credit score. When you or your insurance pays off a debt — collections included — it is removed from your credit report.

How to keep medical bills off your credit reports

Of course, it’s best to avoid debt as much as possible. Outside of paying on time, there are a few things you can do to improve your finances when you’re struggling:

- Negotiate a lump sum payoff. Healthcare providers and debt collectors may be willing to work with you to pay off your debt. They’d rather collect some of the debt than nothing at all, and you may be able to negotiate a lump sum payoff that’s smaller than what you owe. Especially if you can demonstrate you’re financially constrained.

- Work out a better payment plan. You can’t always work out a smaller, lump-sum payment opportunity, but you may be able to work with healthcare providers and debtors. You can also try negotiating a more manageable payment plan.

- Seek financial assistance. You may qualify for financial aid depending on your income, the cost of your medical bills, and the specific requirements for certain programs. Local or state grants, religious groups, and nonprofit organizations are all potential qualifiers for assistance.

- Use a balance transfer. Some credit providers allow you to transfer a balance from another account, which is incredibly useful if the original account earns high interest. It can slow down the growth of the debt and give you more room to pay it down.

It’s important to know how to fix and repair your credit and what changes can help improve your credit report and credit scores.

Keep track of your credit with EarnIn

When managing your financial health and credit report, you can get help from a credit monitoring service. EarnIn’s user-friendly app offers free credit monitoring and more.

Our Cash Out tool lets you access your pay as you work — up to $100 a day and up to $750 every pay period — so you have what you need to keep moving forward financially. All with no interest, no credit checks, and no mandatory fees.

Download the EarnIn app today and experience money at the speed of you.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.