Do Medical Bills Affect Your Credit?

Do you know if medical bills affect credit? Learn if it is true and how you can work on your medical bills to prevent impact and damage on your reports.

Credit impacts: medical bills and debt on reports

Learn how medical bills can impact your credit score. Source: Adobe Stock.
Learn how medical bills can impact your credit score. Source: Adobe Stock.

As you probably already know, medical bills can affect credit scores. But, the process is usually quite different than when you have another type of debt.

That is, typically, medical providers don’t report a debt to credit bureaus. They can go after collection agencies, and it can potentially damage affect your credit.

Generally, the whole process takes approximately a year to definitely appear on your reports. 

Also, it is important to say that if you pay your medical bill through a credit card, failing a payment can lead you to credit damage since card issuers report to credit bureaus. 

Now, find out more about those processes and how to prevent a higher impact in order to build stable finances.

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Can medical bills affect credit and appear on reports?

Medical bills can be overwhelming, but will they stay on your credit reports? Source: Canva.
Medical bills can be overwhelming, but will they stay on your credit reports? Source: Canva.

Shortly, yes, medical bills can affect credit and appear on reports.

However, medical providers don’t report to credit bureaus in most cases. Usually, they report unpaid bills to collection agencies.

Therefore, eventually, the debt will appear on a report, typically like a year later. Consequently, your credit score will be damaged. 

Furthermore, if you pay your medical bill using a credit card, failing on a payment will lead to appearing on a report since card issuers send unpaid bills to credit bureaus unless you negotiate and pay for the debt. 

According to research, medical debt is the main reason why collection agencies contact consumers. 

Unfortunately, medical situations can happen with no advanced notice. Additionally, many people who don’t have insurance or even those who have, don’t really know how the coverage works and if it is worth it.

So, even though an unpaid medical bill is not always reported to credit bureaus, it is crucial to understand that your credit will be affected eventually, no matter the process behind it. 

Moreover, it is essential to say that some changes are occurring this year when it comes to credit and medical bills.

For example, paid debt won’t longer appear on reports, as well as medical collection debt of a maximum of $500.

VantageScore® 3.0 and 4.0 models won’t consider medical collections for score calculations too.

On the other hand, keep in mind you are still responsible for paying debt when it happens.

How long do medical bills stay on reports and what impact do they have on credit?

Medical bills will impact your pocket more than your credit reports. Source: Adobe Stock.
Medical bills will impact your pocket more than your credit reports. Source: Adobe Stock.

The Consumer Financial Protection Bureau says that a paid medical collection debt can remain on reports for up to seven years.

But, as shown above, some changes are happening.

So, in summary, paid medical collection debt will be removed from reports. And medical collection debt of a maximum of $500 won’t appear on the reports, as well.

Also, VantageScore® 3.0 and 4.0 models won’t consider medical collections for score calculations.

The impact on your credit score will depend if the medical provider reports an unpaid bill to a collection agency. If it happens, the collection item may drop your score by an average of 45 to 125 points, depending on your credit score, according to the Consumer Financial Protection Bureau.

How to remove a medical debt from your credit report?

Firstly, the most important step you can take is regularly track your credit score and reports. Sometimes, an error can happen, and you can file a dispute for free in order to adjust your reports and, consequently, your credit score.

Furthermore, if a debt is right, it is essential to try to negotiate and pay it off. 

After that, credit bureaus will remove it from your reports.

Can you prevent medical bills from appearing on my reports?

You will only be able to truly prevent an unpaid medical bill from appearing on your reports and affecting your score if you have proactive behavior on your finances.

1. Build an emergency reserve

The best first step you can work on is building an emergency reserve. An emergency reserve will help you with unexpected situations, including medical conditions.

2. Consider applying for health insurance

Another key task is to search for good health insurance with great coverage at reasonable costs.  

According to research, many Americans go into debt when seeking healthcare.

Although most insurance providers don’t cover all, they can relieve the major cost if something happens.

But, as mentioned before, it is essential to learn all about this type of insurance as well as it is crucial to understand how the coverage works.

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3. Track your finances and reports

Of course, you will only be able to find problems and address solutions if you regularly track your finances and control your reports closely.

There are ways you can access reports for free. In fact, most major credit bureaus let people access scores and basic report information at no extra cost.  

4. Pay bills on time

If you manage to pay your bills on time, you can avoid collection agencies and credit bureaus from putting your debt on reports.

5. If debt happens, try to negotiate it fast

Now, if debt happens, it is important to address the problem and seek a solution. So, make a plan to negotiate it fast in order to prevent higher impact and further damage on your reports and credit scores.    

Recommendation: Credit Essentials – everything you need to know

As can be seen, unpaid bills can deeply affect your credit score. Although processes may change depending on the nature of the debt, the main operation is quite similar.

That’s why it is crucial to understand all about credit.

If you want to build solid finances, take a look at the Credit Essentials article now and learn everything you need to know about credit.

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Credit Essentials: everything you need to know

Credit Essentials: everything you need to know! Follow our tips and build a solid financial path!

About the author  /  Aline Augusto

My name is Aline Mesquita; I'm a writer here on the blog, where I write about finance in general and other subjects. I have been working with content creation for ten years. Also, I'm post-graduated in Project Management, with expertise in SEO practices. Currently, I am studying finance, market trends, and cryptocurrencies.

Reviewed by  /  Aline Barbosa

Senior Editor

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