How Do Medical Bills Affect Your Credit?
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With healthcare costs on the rise, many Americans are burdened by high out-of-pocket costs — even those with health insurance. This issue can lead to significant debt for many, especially those facing serious medical needs.
If you find yourself in this situation, you might wonder if medical bills can show up on your credit report and impact your credit score. The short answer is: maybe.
Here’s how medical debt can affect your credit and how to deal with bills that get sent to collections.
Do Medical Bills Affect Your Credit?
Whether a doctor or hospital bill can impact your credit depends on the amount you owe, when the bill was issued and the payment status.
Since 2022, the main credit bureaus (Experian, Equifax and Transunion) no longer include paid medical bills on consumer credit reports. So, if there's an unpaid bill listed on your report and you later manage to pay it off, the bureaus will delete that negative item from your credit history.
The reporting agencies introduced additional policies in 2023, this time focusing on unpaid medical debt. The new rules state that unpaid bills under $500 won’t be included on credit reports. Bills over $500, on the other hand, can be reported if they’ve been unpaid for over a year and turned over to collections.
With these changes, the percentage of Americans with unpaid medical debt went from 14% in March 2022 to 5% in June 2023 according to the Consumer Financial Protection Bureau (CFPB). However, research by the agency shows that 15 million Americans still have medical bills on their credit files.
How unpaid medical bills affect your credit
If you don’t pay your hospital or doctor bills for three months or more, your medical provider might turn them over to a collection agency. After that, the debt may be reported on your credit report if it has an initial balance of $500 or higher and remains unpaid for over a year. Having a medical collection on your credit report can lower your credit score, since it impacts the most important credit scoring factor: your payment history.
Newer credit scoring models, like FICO 9, place less weight on medical collections compared to non-medical debts, like personal loans or credit cards. However, keep in mind that some creditors might use older scoring models that give medical collections the same weight as other unpaid debts.
How To Dispute A Medical Bill On Your Reports
As of 2023, the consumer credit bureaus have stopped including the following types of medical bills on credit reports:
- Medical bills that have been paid
- Medical bills less than a year old
- Medical bills under $500
If you check your credit reports and see a bill that fits one of these categories, file a dispute with the credit bureau that is incorrectly reporting it. Filing a dispute is free and you can do it online or by phone. Be prepared to provide evidence of your claim, such as records from the collection agency showing you paid the balance in full.