Do medical bills affect your credit?

If you’ve ever had an injury, illness or surgery, you might know what comes next—the potential for expensive medical bills. 

If you’re struggling to pay these bills on time, you’re not alone. But if they aren’t paid, the medical provider could turn the account over to a collection agency. In fact, medical debt continues to be the top reason consumers are contacted by debt collectors, according to the Journal of the American Medical Association.

When medical debt ends up in collections, it could hurt your credit scores. And if you use a credit card to pay your medical bills, there could be an impact as well. 

Key takeaways

• Medical debt that’s already been paid off is not included in credit reports.
• Medical debt under $500 is not included in credit reports.
• Medical providers might turn unpaid medical debt over to collection agencies, and that could affect credit scores. 
• VantageScore® says its 3.0 and 4.0 credit-scoring models do not consider medical collections as part of credit-scoring calculations.

Medical bills can potentially affect your credit, depending on how and when you pay them. The most direct way is when you don’t pay the bill for a period of time and your health care provider turns the account over to a collection agency. If that happens, it will affect your credit scores, although it may take a year for it to appear on your credit reports.

If you pay your medical bills with a credit card, it could impact your credit as well, especially if you can’t pay that balance or make the minimum payment. Paying an expensive medical bill with a credit card could also affect your credit utilization ratio, which measures how much available credit you’re using and is an important factor in calculating your credit scores. 

It’s a good idea to work with your insurance provider to understand your coverage options, in-network estimates and more. Having this information before you schedule a doctor’s visit or procedure may help you avoid unexpected expenses for medical treatments.

Finding more affordable options might minimize the risk of your bill being turned over to collections. That’s important because a valid collection account can remain on your credit reports for up to seven years, according to the Consumer Financial Protection Bureau (CFPB). Fortunately, Experian® says the collection item has a smaller effect on your credit over time.

TransUnion®, Experian and Equifax®, the three major credit bureaus, made changes in 2022 and 2023 regarding medical debt and credit reporting:

• Medical debt that has been paid is no longer included on credit reports. 

• Medical debt that totals less than $500 is no longer included on credit reports. 

In 2023, VantageScore removed all medical collection debt from its VantageScore 3.0 and 4.0 credit-scoring models. The credit-scoring company estimated the change could help consumers with medical collection debt see up to a 20-point increase in their scores. 

However, these VantageScore changes could result in some people becoming unscorable. That’s because individuals who only have medical collection debt on their credit reports essentially won’t have any credit information to score once medical collections are removed.

It’s important to note that different lenders may use different credit-scoring models to judge creditworthiness. While these VantageScore changes could help some consumers see a boost in their VantageScore 3.0 and 4.0 credit scores, these changes won’t apply to other credit-scoring models—such as FICO® scores. 

You can monitor changes to your VantageScore 3.0 credit score and TransUnion credit report by using CreditWise from Capital One. It’s free to sign up, and checking won’t hurt your credit scores.

Medical bills generally only appear on your credit reports if you don’t pay the bill and your health care provider turns the account over to a collection agency. That’s because, according to Equifax, most health care providers don’t report to the three major credit bureaus. 

However, if the account does appear on your credit reports, it may hurt your credit scores. A 2014 CFPB analysis indicated that a 680 FICO score could drop 45-65 points if a collection was reported. For a 780 score, the report said it could drop 105-125 points.

You could use AnnualCreditReport.com to keep an eye on your credit reports. If you find inaccurate medical collection debt on your credit reports, you could reach out to the medical provider or collection agency that’s associated with the debt. You can also file a dispute with the credit bureau that’s displaying the inaccurate information. 

That’s why it’s a good idea to regularly monitor your credit reports for mistakes or changes.

Some medical collection accounts may have errors. If that’s the case, contact your health care provider or collection agency first. You can also file a dispute with each credit bureau that lists the incorrect information. It’s free to file, but you may need to show why you believe there’s an error, according to Experian. This may include:

• Records from the collection agency.
• Documents from your insurance company or medical provider.
• Documents that show the bill has been paid, such as copies of a check or a credit card statement.

If the dispute is settled in your favor, the credit bureau will update or remove the collection account from your credit report. It typically takes up to 30 days for the updates to show up on your credit reports. According to Experian, the three major credit bureaus will remove medical debt reported by a collection agency if you can show that your health insurance company paid the bill. 

Being proactive is one of the best ways to prevent medical bills from appearing on your credit reports. By reviewing each medical bill and working out a payment plan with the health care provider, you may avoid the collections process altogether. Consider taking the following steps recommended by the CFPB:

If you don’t understand some of the charges or you believe there’s an error, contact the provider. Ask them to explain each part of the statement or ask for an itemized bill to check how much you were charged for each service.

Ask the health care provider whether they’ve requested payment from your health insurance company. They may have mistakenly sent you a bill before running it through insurance. If your health insurance company received the bill and decided against paying it, you could appeal the decision. Appeals processes vary from company to company. Your insurance provider should be able to tell you what you can expect from the review.

Once you understand the charges and you’ve confirmed you’re responsible for the balance, it’s best to pay the bill by the due date. Keep documentation of your payment, and make sure it’s processed.

If you can’t pay the entire medical bill at once, your medical provider might be willing to set up a payment plan or lower the amount due if you contact them before it’s turned over to a collection agency. Before agreeing to a payment plan, make sure it’s realistic for your budget. Get details of the agreement in writing, and then pay the installments on time.

Your credit reports and credit scores play an important role in your overall financial health. This information can influence whether you’re approved for a loan or credit card. And it can also impact the interest rates you’re offered. 

That’s why it’s important to regularly monitor your credit reports and verify the information they contain is accurate. And if you find paid medical debt on your credit reports, you can request that the bureaus remove it. 

You can visit AnnualCreditReport.com to request free copies of your credit reports. CreditWise can help for free, too: 

• Use it to monitor your TransUnion credit report and VantageScore 3.0 credit score.

• Find out when meaningful changes are made to your TransUnion and Experian credit reports. 

• Use the CreditWise Simulator to see how certain financial decisions could impact your score.

Get alerts when CreditWise detects suspicious activity or finds personal information, such as your Social Security number or email address, on the dark web.

If you’re still not able to pay your medical bill, you may want to search for additional resources to help you manage it—and hopefully avoid hurting your credit.

Either way, it’s always a good idea to monitor your credit. When you sign up for CreditWise, you can access your free TransUnion credit report and VantageScore 3.0 credit score anytime. Using CreditWise won’t hurt your credit scores. Plus, it’s free and available to everyone—not just Capital One customers.