Can Medical Bills Affect Your Credit Report?

By Nancy Bilyeau · December 15, 2021 · 4 minute read

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Can Medical Bills Affect Your Credit Report?

For some of us, a hospitalization or other medical treatment comes with a price tag that packs a serious punch. Not dealing with these costs can prove damaging to your credit score. Some people may be confused about how much they owe on a medical bill, merely put it out of their mind, or even forget about it.

Once a medical bill becomes delinquent, many hospitals and individual medical providers will send it to collections. Unpaid medical bills might affect your credit report. But there may be ways to lessen the impact.

Do Medical Bills Hurt Your Credit?

According to the Consumer Financial Protection Bureau, 52% of all types of debts in collection are medical bills. The amount of medical debt in collections in June 2020 was about $140 billion and affected 17.8% of Americans. Currently, 50% of Americans report having unpaid medical bills, not necessarily in collections.

Unpaid doctor or hospital bills typically don’t automatically hurt your credit score. But debt collections can potentially affect your credit score. A low credit score may make it more expensive to borrow money or more likely that a loan application could be denied.

It’s possible for a medical collection to affect your credit scores differently than other types of collections, according to CreditKarma. Some scoring models give less weight to outstanding medical debts than they do other collections, such as credit card debt. And some, but not all, credit-scoring models will disregard unpaid medical bills if you originally owed less than $100.

The other good news is that the three credit bureaus, Experian, Equifax, and TransUnion, have set a 180-day waiting period from the time the bill is sent to collections before including the medical debt on a credit report. This is intended to make sure there’s enough time to solve any disputes with insurers and allow for delays in payment.

Can Medical Bills Be Removed From My Credit Report?

The Fair Credit Reporting Act (FCRA) allows collections to be reported for up to seven years and credit bureaus are not required to remove them once they’ve been paid. Fortunately, as time goes by, the account in collections counts less toward your credit scores.

If your bill went to collections by mistake, you may be able to have it removed by proving it was a mistake. Collect as much evidence as you can to prove your case: Gather credit card or checking account statements or ask for payment records from your medical provider’s billing office.

You can file a dispute with the credit bureau that’s reporting the error. The credit bureau will investigate and respond to you within 30 days. You may also receive email updates from the credit bureau regarding the status of your dispute.

Does Paying Off Medical Collections Improve Credit?

If there’s no error involved and you eventually pay off the medical debt, it won’t immediately be removed from your credit report. After you pay off the bill, It will be less significant over time on your report, but it will still be there until the seven-year point implemented by the FCRA.

If you can get your health insurance company to pay the debt, you can request that the credit bureaus remove it from your reports. So if you have reason to believe your insurance company should have paid a medical bill, ask your insurer to reconsider your insurance claims.

What to Do if You Can’t Pay Your Medical Bills

If the balance on your medical bill is your financial responsibility but you’re unable to pay it, there may be options to relieve your medical debt.

•   Ask the medical provider if you can set up a payment plan that is manageable with your monthly budget.

•   Thoroughly review your explanation of benefits the insurance company provides. Finding billing errors or negotiating some of the charges could lower the total amount due.

•   A temporary part-time job may help bring in extra income that could be put toward the medical debt.

•   Getting assistance from a patient advocate might be an option worth considering if you can’t get the provider to budge on the payment.

•   Applying for a personal loan, which could have a lower interest rate than credit cards (depending on your credit record and other factors) may offer another option for payment.

Being Proactive About Medical Bills

Just because you left a doctor’s office without paying more than a copay doesn’t necessarily mean the bill is settled. In addition, the provider’s billing to your insurance company doesn’t automatically mean it will be accurate or even paid.

If you haven’t received a statement from your medical provider’s billing office within a few weeks of your appointment or hospital stay, it might be a good idea to call for a billing update. Catching errors early in the billing process may keep medical bills off your credit report.

If you know ahead of time that you won’t be able to pay the entire amount owed, contacting the provider’s billing office and trying to negotiate a payment plan may be a good first step. If you can come to an agreement, it’s a good idea to get it in writing.

Should a collection agency employee contact you about a bill you think has been paid or should have been paid by insurance, stay calm and ask if you can call back with information that shows there’s no open balance.

The Takeaway

If you do have unpaid medical bills on your credit report, focusing on getting them paid has the potential to make a real difference to your financial future. Staying on top of medical bills can mean extra vigilance, but the effort is worth it to keep medical debt from affecting your credit.

If paying your medical bills with a personal loan makes sense for your financial situation, a medical loan from SoFi might be right for you. An unsecured SoFi Personal Loan can be used for medical bills, in addition to other expenses, and has no fees, competitive interest rates, and a variety of repayment terms to work with different budgets.

Check your rate on a medical loan from SoFi


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