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Do Medical Bills Affect Your Credit?

Recent credit scoring model changes mean medical debt has less weight in your credit score.

But health care debt could still land in your credit file, limiting your ability to borrow and lowering your credit score.

When this happens, you’ll also be hearing from medical collections agencies.

How can you keep healthcare debt off your credit report?

How do you keep medical collections agencies from calling you every day? This post will help you find out.

Medical Debt and Your Credit

Healthcare, or medical debt, now carries less weight on your credit.

In the past, the leading credit scoring models treated medical debt the same as any other kind of debt.

But over the past few years, newer models have put less emphasis on medical debt.

These kinds of changes make a lot of sense. After all, if your health insurance company doesn’t pay its portion of your medical bill, why should you have bad credit?

Also, why should your credit score — which tells lenders all about your financial habits and choices — be so heavily influenced by expenses you didn’t ever choose to incur?

Hardly anybody plans a hospital visit, for example. According to a 2015 Federal Reserve report, many people couldn’t afford a $400 emergency room visit.

And as most of us know, healthcare providers almost always charge more than $400 for medical services that go beyond a well visit.

It’s not unusual to accrue thousands of dollars in medical expenses after a hospital visit or diagnostic test.

How Unpaid Medical Debt Affects Your Credit Report

Your healthcare provider probably does not report your debt to the three credit reporting bureaus — Experian, Equifax, and TransUnion — the way an auto lender or cellphone service provider would.

It is possible some larger hospital billing departments report debt directly to the credit bureaus. But healthcare providers are much more likely to deal with past due balances through debt collection agencies.

That’s how most medical debt reaches the major credit bureaus — through collection accounts that have received your debt from a hospital or clinic.

Once it arrives on your credit file, old medical debt shouldn’t impact your score for at least 180 days. After that grace period expires, the debt would appear in your credit history which lenders can see when you apply for a loan.

By their nature, collection accounts can have a noticeable negative impact on your credit history. Someone with excellent credit, for example, could see a drop of 75 to 100 points.

A drop like this could mean you’re denied the best credit cards and other sorts of unsecured loans. When you do get approved for borrowing, you’d probably pay higher interest rates.

Medical Debts and the New FICO Scoring Model

The VantageScore model has grown more popular lately, but most lenders will still check your FICO score.

The Fair Isaac Corp., or FICO, recently released a new scoring model, FICO 9, which gives medical debt even less weight than it had a few years ago. (The VantageScore 3.0 has followed a similar pattern.)

There’s more good news in the newer credit scoring models: FICO is changing how it deals with unpaid bills that have been settled.

Overdue or delinquent bills that have gone to medical collection accounts no longer count as unpaid bills once they’ve been settled.

Under previous models, if you paid an old medical bill that was in collections, it could still be calculated in a credit score as unpaid.

Keep in mind you lose these new protections if you pay your medical costs with a credit card and then can’t pay the credit card bill. Credit card debt-fueled by medical expenses will be treated like any other debt — hurting your payment history and your credit utilization ratio.

FICO 8 Is Still In Effect

This good news about medical debt in FICO 9 won’t help if your lender or utility service provider still uses the FICO 8 scoring model.

Many lenders still use this model.

So if you’re having trouble with your personal finances because of medical debt, you may want to use another strategy to get the debt removed.

How to Get Medical Debt Removed from Your Credit Report

Medical collection accounts can stay on your credit report for up to seven years with the most recent accounts hurting your score the most.

Over time, your past-due health care bills will carry less weight. Within a few years, your creditworthiness could be back on the road to recovery.

But what if you can’t wait that long? Or what if the health care bills were reported inaccurately?

Here is a quick overview of how you can handle it, or keep reading our post on “How To Remove Medical Collections From Your Credit Report.”

Disputing Medical Debt

The Fair Debt Collection Practices Act requires debt collectors to report only accurate information.

So if your credit report includes inaccurate data, you have the right to get this information corrected.

You can dispute inaccurate information online with each of the three credit reporting agencies.

If this is the only negative information on your credit, you can expect to have a good credit score within a couple months.

Negotiate a Pay-for-Delete Agreement

If you do owe them money, consider negotiating a debt settlement with the debt collector.

You could agree to pay a certain amount in exchange for the collection agency removing all negative information from your credit report.

Be sure to get this payment plan in writing before you make payment arrangements.

Be sure that your payment releases you from the entire debt.

Without this documentation, any payment could be treated as a partial payment.

A partial payment would re-set the clock on your statute of limitations which limits how long you can be sued for an old debt.

Most states set statutes of limitations for medical debt at three to six years.

What About My Health Insurance Company?

What happens when your health insurance provider does not pay and you’re left with a huge bill from your medical provider that gets reported to medical collections?

Unfortunately, this happens too often. Health insurance is confusing.

Insurers don’t always pay what you think they should pay because of waiting periods, deductibles, and unmet out-of-pocket limits.

This is why the credit bureaus have started giving a 180-day grace period before medical debt starts hurting your credit.

Most insurers have appeal processes so you can try again to get a claim paid.

But if your insurer just won’t pay, you’ll still be personally responsible for the debt. Eventually, the medical debt can hurt your credit score.

So, if possible, talk to your insurance company before getting medical care.

Find out how much of your health care bills you can expect the insurer to pay.

Obviously, this isn’t possible if you need emergency medical services.

ut you can still read your health insurance policy carefully when you buy it to learn how much you would be responsible for in case of an emergency.

Also, be sure to ask the cashier at your doctor’s office or hospital about how much you owe out of pocket.

Some clinics won’t prompt you to make your co-payment which leads to past-due balances you would have paid if asked.

Alternatives to Health Insurance Payment Arrangements

Many hospitals also have payment relief for patients who qualify financially, especially for patients without insurance.

If you’re having trouble paying for medication, look into the Good Rx program online.

You can also ask about payment plans; hospital billing departments tend to be more understanding when you communicate with them regularly.

However, hospitals still have the right to send past-due balances to collection agencies.

But by staying in touch with your medical provider about your past-due bill, you could prevent a medical collection account which will hurt your credit score.

You should also check every hospital bill for accuracy. Sometimes patients get double-billed for a procedure or a medication.

Health care bills are large enough without having to pay for something twice!

Your health care provider may also have special payment arrangements for Covid-19 treatment and testing.

Monitoring Your Credit Score Helps with Early Detection

The Consumer Financial Protection Bureau provides everyone with a free credit report once a year from each of the three major credit bureaus.

Visit to see your free credit reports. Rather than getting all three reports at once, I recommend getting one report every four months.

Since the three credit reporting agencies often show the same information, staggering your credit checks can give you more chances to find credit inaccuracies early.

You can also use a free app like Credit Sesame or Credit Karma to monitor your credit score every day.

These services will show you lots of ads for credit cards and personal loans, but that’s a small price to pay for constant credit monitoring.

Monitoring your credit will let you see medical debt before it has time to wreck your credit report.

Get a Free Copy of Your Credit Report

Tips for Dealing with a Medical Collection Agency

If you find yourself with a past-due balance that’s been sent to medical collections, stay calm and learn your rights.

The Fair Debt Collection Practices Act gives you control over how and when a debt collector contacts you.

I suggest insisting on written communication. That way you have a paper trail, and you won’t have to deal with constant phone calls about your unpaid medical bills.

Know that debt collectors have no authority to press criminal charges against you; they could file a civil lawsuit seeking repayment.

If you do decide on a payment arrangement with the collection agency, get all your payment details in writing first.

Make sure your payment or payment plan will cancel the debt fully before you send payment.

Make sure your payment will result in the debt’s removal from your credit reports.

Federal law gives you more control over debt collection.

If you feel like a medical collection agency is violating your consumer rights, call your state attorney general’s office or file a complaint with the Consumer Financial Protection Bureau which is part of the Federal Trade Commission.