Do medical bills affect your credit?

Medical bills could affect your credit, depending on the amount and when you pay them. If you pay your bills on time, the debt shouldn’t show up on your credit reports. And if any overdue bills are less than $500, they won’t be reported to the three main credit bureaus. 

But if the debt gets sent to a collection agency, unpaid medical bills could affect your credit. 

What you’ll learn

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

However, if the account does appear on your credit reports, it may hurt your credit scores. A 2014 Consumer Financial Protection Bureau (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.

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. 

However, unpaid medical debt that’s more than $500 could stay on your credit report for up to seven years from the date it becomes delinquent.

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.

You can’t remove medical debt from your credit reports if you actually owe money. But you may be able to get inaccurate information or mistakes removed from your reports by disputing them.

That’s why it’s a good idea to regularly monitor your credit reports for mistakes or changes. You could use AnnualCreditReport.com or CreditWise to keep an eye on your credit reports. And if you do notice any errors, you may want to take action soon. 

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 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. Here’s how you can use CreditWise to help you stay on top of any medical bills that could affect your credit scores: 

• Use it to monitor your TransUnion credit report and VantageScore 3.0 credit score so you can see if a medical bill has affected your score.
• Find out when meaningful changes are made to your TransUnion and Experian credit reports so you can make sure paid bills are accurately reflected on your credit report. 
• Use the CreditWise Simulator to see how certain financial decisions, like paying off a medical bill, could impact your score.

If you’re not able to pay your medical bill, you may want to search for additional resources to help. Keep in mind, medical bills that are paid off and are less than $500 no longer appear on your credit reports. But if your medical debt is sent to a collection agency, it could hurt your credit scores.

That’s why 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 cardholders.