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Credit Score and Medical Bills Impact

How Medical Bills Affect Your Credit Report

Ashley Newman

Do medical bills affect credit score? Yes. There is a common killer of your credit score – unpaid medical bills.

Sometimes, due to a misunderstanding with your doctor or your health insurance company, your score can take a plunge in points for something that may not even have been your fault. Of course, there are times when your credit score can suffer because you simply could not afford to pay the cost.

You can ensure you have a healthy credit score by making on-time payments. Having a debt management strategy in place can help you stay at the 30 percent total credit limit.

Medical debt itself is not a pleasant issue to have to deal with, but it gets worse when it affects your credit score.

Do Medical Bills Affect Your Credit Score?

If you pay your bill a few days after you receive it – your credit rating won’t be affected, of course. But if health providers turn over your unpaid debt to a collection agency – the situation takes another twist. An unpaid medical bill can have a negative impact of up to 100 points on your credit score.

Also, even if not paying is not a crime, you could be sued in a civil court by the collection agency. It can also hurt your ability to borrow money, making it really expensive. Fortunately, there are still available options to get a loan even with a bad credit score and without going bankrupt at the same time.

Nevertheless, as of Sept. 15, 2017, your health care service provider will wait 180 days before reporting your medical debt to a collector. Keep reading for more details.

The impact of having a collection account such as unpaid health care bills on your credit history depends on the type of scoring model and the version used by your lender to check your ability to repay the debt. Some credit scoring models like the FICO 9 and the VantageScore 3.0 disregard medical collections accounts and remove the debts in case these are already paid.

Old FICO Score System

The old FICO scoring model used to treat your medical bills that go to collection the very same way as any other unpaid bill. If a consumer didn’t pay just one bill which goes to medic collections, his credit score could drop by 100 points. That means embarking on long and unnecessary credit repair strategies to get that credit scores back up over time.

Sad Example – 100 Points Drop

A perfect example of this is a couple in Texas who had excellent credit scores earned over years of proper budgeting and financial knowledge. With such good credit, they decided to sell their home so that they could move their growing family into a bigger place near Dallas.

They were in for quite a shock when they saw their credit report. From the high 700’s it had dropped to 600 points. Why? Because of their payment history, namely a health care bill in collections and of which they were unaware. What is more strange is that the bill had been paid! They still had to pay an additional discount point of $2,500 to secure the loan. And this is not an isolated case.

Scary Statistics

Research carried out by the Commonwealth Fund, estimated that more than 30 million Americans had unpaid healthcare bills and had been contacted by collection agencies.

All the collection records used to stay on credit reports for up to seven years, regardless of the fact that the individual had paid it off. It is easy to believe that healthcare bills used to account for the majority of collection actions on personal credit reports. The value of most of these collections was less than $250!

Medical Bills on Credit Report | 2017 Good News

According to the new rules introduced in 2017, medical debt is treated differently than other types of debts. Before listing a medical debt into the credit report, the credit bureau has to wait 180 days. In this period of time, you can debate health care bills with both your insurance company and your medical provider.

Also, your paid medical debt can be now removed from your credit report, unlike other debts that remain on consumer’s credit report for at least seven years.

Therefore, according to the latest version of the FICO scoring system, FICO Score 9, most lenders give medical debt less weight than other debts. So do the three major credit bureaus — Experian, Equifax and TransUnion and the latest version of VantageScore. Furthermore, if the original unpaid bill is less than $100, the new FICO scoring system ignores collection accounts.

So, can medical debts affect your credit score? Yes, they can, but you shouldn’t give them priority over other debts you have. Nevertheless, failure to repay a bill may hurt a major factor in determining your credit scores: your payment history. Therefore, if you have an invoice in medical collections it can seriously damage your credit scores.

Avoid Medical Bills Hurting Credit Scores

How Can You Prevent Medical Bills Hurting Your Credit Score?

What are some of the actions you can take to ensure a medical debt does not end up in collections? Here are a few credit tips to think about:

Understand How Your Insurance Works

There are medical bills collections because people cannot afford to pay them. That is the obvious one. If you understand how your insurance plan works, you could be better prepared for any potential healthcare costs that may arise.

For example, ask yourself the following questions:

Does your plan allow for wellness visits?

How much can be deducted?

Will you have to pay the extra from your own pocket after the deductible has been taken care of?

Adopting the ‘wait and see’ approach to bills after an emergency or after surgery is not a good plan. You should know where you stand.

In case you either don’t have health insurance or your insurance company can’t cover your medical debt, you need to find out at least an estimated figure of your medical expenses. There are multiple options, such as short-term loans that are specially designed for covering unexpected bills.

Then figure out how you can come to an agreement with the hospital. Maybe they accept medical credit cards or medical loans, or maybe they can offer you a special repayment plan or any other solution for your situation.

Track Your Medical Bills

If you didn’t receive a bill, although you’ve recently visited your doctor, don’t wait until a medical debt arises out of nowhere. Call your health care provider to make sure you didn’t miss an invoice. Always read all the letters and emails you receive, but above all – indicate the accurate contact information.

Check the Charges

To error is human. We all make mistakes, including medical workers and insurers. Even a small mistake may result in a significant difference in your charges. Always carefully review your health care bill and your benefits as an insured person. In case you spotted an error, you must inform about this both your medical provider and your insurer.

* Tip. Ask for a detailed bill to check all the charges for accuracy when at a hospital.

What should you do if you still end up with a medical bill you can’t pay? You have a few options that may help you keep your bill from going to medical collections.

Have a Payment Plan

Don’t wait for a medical bill to go to collections, make arrangements to pay back the invoice over time, and try to work out a clear plan. Not everybody can afford to pay the total bill at the time of discharge. Hospitals are geared to negotiate a payment plan.

A hospital will probably not even charge you interest if the total amount due is paid off within a year or two. Some hospitals will also allow you to finance the payment through a loan.


Before accepting any medical services, try to get an estimated cost. If this cost is too high and you can’t afford it at that moment, try to negotiate with your health provider. Generally, you can do it afterward too. If succeeded, get the new amount you owe in writing.

For example, if you are not insured or if you pay out of pocket, you may be offered special lower rates.

Track Your Credit Score

While holding on to all your health care bills, also make regular checks on your credit report to ensure there are no errors. As unbelievable as it may sound, but four out of every five credit reports have simple human errors. If you find a mistake or any suspicious activity in your credit history, take action, and have these discrepancies removed. It would be a frustrating exercise to have to repair your credit report for no reason at all.

Ask for Providing a Proof of Health Care Debt

What Happens When a Medical Bill Goes to Collections

If a collector has contacted you about a health care debt, you can ask them not to report and pay it straight away. Before paying, request the collection agency to provide you with proof of your debt in writing.

A Medical Bill in Collections By Error?

If 180 days have not yet elapsed since you received your invoice, you have a few options.

First of all, gather all the pieces of evidence. If you paid your bill, search for documents confirming it, like hospital payment records. File your dispute and check your credit scoring from all the three major credit bureaus. Be collaborative and provide any additional documentation requested and just keep communicating in order to solve the error as soon as possible.

Nevertheless, there is a chance your error won’t be removed from your credit reporting.

By the way, make sure your records of outstanding bills are the same as what has been presented to you as there may be different scams around by dummy collection agencies.

How to Dispute a Medical Bill?

If in spite of all your efforts you need to dispute a medical collection, take the following steps.

First of all, contact the collection agency and ask for validation. Send a letter in which you require the agency to validate that the unpaid medical debt actually belongs to you. Indicate the deadline for their answer (typically 30 days) and the fact that if they can’t validate the debt, you want it removed from your report.

Afterward, if the error wasn’t removed, ask for a free copy of your credit report and check any inaccuracies. If you spotted an error you should dispute this with the credit bureau, which might drop the debt from your credit report if the information can’t be verified. Bear in mind this is only a possibility. But it is still worth exploring as it may mean an improved credit score.

Ultimately, consider hiring a billing advocate. Getting professional advice and support may be the perfect (and last) option, especially if you already tried to solve this issue by yourself.

If Your Debt is Valid

First of all, you shouldn’t give priority to medical debts over other debts you have. As already mentioned, starting in 2017, medical debts are treated more tolerantly by credit bureaus.

Also, you shouldn’t trade your health care debt for other debts you have or get a loan or use a credit card to cover your medical expenses (including low APR credit cards). The reason is that they usually don’t carry late fees, having low or no interest payments. If it’s to compare a health care debt and a credit card debt, the first one will appear later on your credit report.

Your best option remains a deal with medical providers or collection agencies. So, keep trying to get a better price and an installment repayment plan.

Final Words

It can be frustrating and somewhat painful dealing with costly unpaid medical bills just because the consumer can’t afford them. With some guidance and financial education, you’ll be able to handle these bills in an appropriate manner that better work for you, and hopefully you’ll maintain a good credit rating.


– How can I get medical bills off my credit report?

Check information for mistakes.

Require to be proved that you have debts.

File a dispute and remove all inaccurate information.

Negotiate and have a payment plan (if you must pay).

– Can medical bills affect your credit score 2020?

Yes, if your health provider turns your bill over to a collection agency it will appear on your credit report. Therefore, your unpaid bill will affect both the credit score and the ability to borrow money.

– Should I let my medical bills go to collections?

No, try all the above-mentioned tips to avoid this scenario.

– Do medical bills go away after 7 years?

Your unpaid health care bill will come off your credit report after seven years, but you’re still legally responsible for it.