Do Medical Bills Go on Your Credit Report?
Understand how medical bills affect your credit report and score. Learn when they appear, their impact, and steps to protect your financial standing.
Medical bills can be a source of financial worry, and a common question involves their appearance on credit reports. Understanding how medical bills interact with credit reports is important for managing personal finances. This article explains how medical bills appear on credit reports, their potential consequences for credit scores, and strategies to protect your financial standing.
When Medical Bills Appear on Credit Reports
Original medical provider bills generally do not appear directly on credit reports. Healthcare providers typically do not report directly to the three major credit bureaus: Experian, Equifax, and TransUnion. Instead, it is unpaid medical debt that has been sent to a collections agency which can then be reported to credit bureaus. Historically, collection agencies had to wait 180 days before placing unpaid medical bills on a credit report. This grace period was later extended to one year (365 days), allowing consumers more time to resolve billing issues with their insurance or healthcare providers before the debt impacted their credit history.
Significant changes have occurred in how medical debt is reported. As of July 1, 2022, paid medical collection debt is no longer included on U.S. consumer credit reports. Furthermore, effective April 2023, medical collection debt with an initial reported balance under $500 was removed from credit reports.
A new federal rule, set to take effect in March 2025, will further change medical debt reporting. This rule will remove all medical debt from consumer credit reports, regardless of the amount or payment status. This upcoming change builds on previous decisions. Once effective, lenders will no longer be able to consider unpaid medical bills as a credit history factor when evaluating potential borrowers.
Impact on Your Credit Score
When medical debt was reported to credit bureaus, it was generally considered a negative mark. Collection accounts, including medical collections, could lower credit scores. For instance, a FICO score of 680 could drop by 45-65 points, and a score of 780 could decrease by 105-125 points.
Newer credit scoring models, such as FICO Score 9 and VantageScore 3.0, treat medical collections differently than older versions. These models may weigh medical debt less heavily or exclude paid medical collections from their calculations.
The removal of paid medical collections and those under $500 has already had a positive effect, with some consumers experiencing an average credit score increase of 20 points. The upcoming rule in March 2025, which will remove all medical debt, is expected to further boost credit scores for millions of consumers.
Protecting Your Credit from Medical Debt
Protecting your credit from medical debt begins with careful attention to your medical bills and proactive communication. Reviewing every medical bill for accuracy is an important first step, as billing errors are common. Understanding what your insurance policy covers and verifying that your provider has correctly billed your insurer can help prevent unexpected charges. If you identify discrepancies, contacting both your healthcare provider and your insurance company promptly can resolve issues before they escalate.
Before a medical bill goes to collections, discussing payment options directly with your healthcare provider is often beneficial. Many providers offer financial assistance programs, payment plans, or discounted rates, especially if you can demonstrate financial hardship. Engaging in these negotiations early can prevent the debt from being sold to a third-party collection agency, which traditionally has been the trigger for credit reporting. Understanding consumer protections, such as the No Surprises Act, can also be helpful; this federal law protects patients from unexpected medical bills, including certain out-of-network charges. Under this act, debt collectors cannot pursue bills that violate its provisions.
Regularly monitoring your credit reports is important to ensure accuracy and identify any reported medical collections. You can obtain free copies of your credit reports annually from each of the three major credit bureaus—Experian, Equifax, and TransUnion—through AnnualCreditReport.com. This allows you to check for any medical debt entries that should have been removed or were reported in error. If you find an inaccurate or outdated medical collection entry, you have the right to dispute it with the credit bureaus.
To dispute an entry, gather all supporting documentation, such as proof of payment, insurance explanation of benefits, or correspondence with the provider. You can submit disputes online, by mail, or by phone to each credit bureau reporting the error. The credit bureaus are required to investigate your dispute, typically within 30 days. If the debt is with a collection agency, you can request debt validation, requiring them to provide detailed information and proof that you owe the debt. Paying off older medical debts that are still on your report, especially those over the $500 threshold, can lead to their removal, as paid medical collections are no longer included.