Can Medical Debt Impact Credit Scores?

An injury, illness, or surgery can result in unexpected and unplanned medical bills. While health insurance may help, many people still struggle to pay medical bills while trying to make ends meet.

Most health care providers do not report to the three major credit bureaus (Equifax, Experian and TransUnion), which means most medical debt is not typically included on credit reports and does not generally factor into credit scores.  

But if a healthcare provider turns your account over to a collection agency because you haven’t paid the amount due, the collection agency may report that information to the credit bureaus after a 180-day (six-month) period.

In 2017, the three major credit bureaus instituted new rules about medical debt reported by collection agencies. Those rules enacted the 180-day waiting period before a medical debt reported by a collection agency appears on someone's credit reports. The waiting period allows consumers time to make payments or payment arrangements with medical providers and insurance companies before the collection agency can report the debt as past due.

In addition, the credit bureaus are required to remove a medical debt reported by a collection agency if the collection agency reports the amount as paid -- or being paid -- by insurance.

If that doesn't happen, however, and the debt is reported as being in collection on credit reports, it will remain for up to seven years -- even if the debt is paid.

When you receive your bill, be sure to examine it carefully and compare it with the explanation of benefits provided by your health insurance provider. If you believe you've found an error, contact your medical provider or health insurance company. Ask for an itemized bill so you can better understand what you're being charged for.

If you’re facing mounting medical expenses, here are some things you may want to consider that may help prevent medical bills from appearing on credit reports:

  • Contact your health insurance company. Know your coverage and follow up to ensure the company is paying costs it has agreed to cover. 
  • Negotiate with your health provider. If you can’t afford to pay a bill, try to work with your medical provider to reduce the amount owed or set up a payment plan.
  • If you believe medical debt has been listed on your credit report erroneously, contact the medical provider or collection agency first. You can also file a dispute with the three major credit bureaus. 
  • If possible, prepare for medical procedures in advance by finding out what your insurance will cover and what costs you’ll be responsible for.

It’s always a good idea to regularly review your credit reports to ensure the information is accurate and complete. You’re entitled to a free copy of your credit report from each of the three credit bureaus every 12 months by visiting www.annualcreditreport.com.