How Medical Debt Affects Your Credit Score (And How to Fix It)

By Built By One Editorial Team · Published 2025-03-25 · Last updated 2026-09-01

Medical debt can significantly impact your credit score if it goes to collections. Learn how to verify, dispute, and remove medical collections from your credit report.

Medical debt can be a silent saboteur of your financial health, often arriving unexpectedly and carrying significant weight. Unlike other forms of debt, medical bills can pile up quickly, sometimes without your full understanding of the costs, and quickly find their way onto your credit report. This can lead to a cascade of negative consequences, impacting your ability to secure loans, rent an apartment, or even get a new job. Understanding how medical debt affects your credit score is the first step toward regaining control.

The Impact of Medical Debt on Your Credit Score

When an unpaid medical bill goes to collections, it becomes a serious blot on your credit report. This isn't just a minor ding; it can significantly lower your score and remain on your report for up to seven years from the date of the original delinquency. Even a small collections account can hurt your credit, but larger ones can be particularly damaging.

How Medical Collections Appear on Your Credit Report

Medical collections are reported to the three major credit bureaus: Experian, Equifax, and TransUnion. They will typically appear under a "collections" or "public records" section. This entry shows the original creditor, the collection agency's name, the amount owed, and the date the account was opened. Lenders view these entries negatively, as they signal a history of unpaid obligations.

The Good News: Recent Changes to Reporting Rules

Fortunately, recent changes have made the landscape a bit more forgiving for consumers. As of July 1, 2022, paid medical collections are no longer included on consumer credit reports from Experian, Equifax, and TransUnion. Furthermore, as of March 1, 2023, medical collections under $500 are also excluded from credit reports. These changes aim to protect consumers from the disproportionate impact of sometimes unavoidable medical expenses.

However, if your medical debt is still unpaid and over $500, it remains a significant credit risk. Unpaid collections accounts can decrease your credit score by dozens, or even over a hundred points, depending on your overall credit profile.

*Related: Understanding the Five Factors of Your Credit Score*

Why Medical Debt Often Goes to Collections

Understanding *why* medical debt ends up in collections can help you prevent it. Often, it's not due to an unwillingness to pay, but a complex mix of factors.

Insurance and Billing Confusion

The healthcare billing system is notoriously complex. You might believe your insurance covers a procedure entirely, only to receive a balance bill months later. Denials, out-of-network charges, and unexpected deductibles or co-pays can all lead to unpaid balances. Always review your Explanation of Benefits (EOB) from your insurance company and compare it with the provider's bill.

Administrative Errors and Delays

Mistakes happen. A bill might be sent to the wrong address, or your insurance information might be incorrectly entered. There can also be significant delays between receiving care and receiving the bill, making it harder to track expenses.

Unexpected Expenses

Medical emergencies don't come with a payment plan. A sudden illness or accident can lead to astronomical bills that far exceed what you anticipated or budgeted for. This is often when people find themselves in a difficult position, struggling to pay for essential care.

How to Fix Medical Debt on Your Credit Report

Even if medical debt is negatively impacting your credit, you're not without options. There are several proactive steps you can take to address the issue and work towards improving your financial standing.

1. Verify the Debt

Before you do anything, ensure the debt is legitimate and accurate. Request an itemized bill from the healthcare provider and compare it against your insurance EOB. Look for duplicate charges, services you didn't receive, or incorrect billing codes.

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2. Dispute Inaccurate Information

If you find errors, dispute them immediately with both the healthcare provider and the collection agency. You also have the right to dispute inaccurate information directly with the credit bureaus (Experian, Equifax, TransUnion). Provide documentation to support your claim. Services like Lexington Law specialize in handling disputes on your behalf.

3. Negotiate with the Collection Agency

Collection agencies often purchase debts for pennies on the dollar, meaning they are often willing to negotiate. You can try to pay a reduced amount, sometimes 50% or less of the original balance, to satisfy the debt. Always get any agreed-upon repayment plan or settlement in writing before making a payment.

4. Consider a "Pay-for-Delete" Agreement

A pay-for-delete agreement is when a collection agency agrees, in writing, to remove the collection entry from your credit report after you pay the agreed-upon amount. Many agencies are hesitant to offer this, but it's worth asking, especially if it's an older account or a relatively small balance. Without this agreement, paying off a collection account will update its status to "paid" but the negative entry usually remains on your report for up to seven years.

5. Seek Professional Credit Repair

Navigating credit disputes and negotiations can be complex and time-consuming. Credit repair companies like Credit Saint or Lexington Law can take on this burden for you. They specialize in challenging inaccurate or questionable items on your credit report, including medical collections, and can significantly improve your chances of success. They understand the intricacies of credit law and reporting practices.

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6. Monitor Your Credit Regularly

Once you start addressing medical debt, it's crucial to monitor your credit reports closely to ensure changes are reflected accurately and no new issues arise. Services like IdentityIQ and SmartCredit offer comprehensive credit monitoring, alerts, and access to your reports and scores from all three bureaus. This allows you to catch any discrepancies early.

*Related: Top Credit Monitoring Services: A Comprehensive Comparison*

Preventing Future Medical Debt Issues

Prevention is always better than cure, especially when it comes to medical debt and your credit score.

Understand Your Insurance Coverage

Regularly review your health insurance policy. Know your deductibles, co-pays, out-of-pocket maximums, and what's covered in-network versus out-of-network. Don't hesitate to call your insurance company with questions about specific procedures.

Ask for Itemized Bills

Always request an itemized bill from healthcare providers, even for routine visits. This allows you to scrutinize every charge and identify potential errors before they become a larger problem.

Negotiate Before the Bill Goes to Collections

If you receive a large, unexpected medical bill, contact the provider's billing department immediately. Many hospitals and clinics have financial assistance programs, offer discounts for prompt payment, or can set up manageable payment plans. It's much easier to negotiate directly with the provider than with a collection agency.

Build an Emergency Fund

Having an emergency fund can provide a buffer against unexpected medical costs. Aim to save 3-6 months' worth of living expenses. Platforms like SoFi offer savings accounts that can help you reach your goals.

Utilize Financial Planning Resources

Tools and resources from platforms like BuiltByOne Wealth can help you budget, save, and plan for potential expenses. Taking control of your overall financial health reduces the likelihood of medical debt becoming a long-term credit issue.

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Conclusion

Medical debt can be an unfortunate reality for many, but it doesn't have to permanently derail your credit. By understanding how it impacts your score, diligently verifying debts, and taking proactive steps to dispute inaccuracies or negotiate payments, you can mitigate the damage. Whether you tackle it yourself or enlist the help of professionals like Credit Saint or Lexington Law, regaining control of your credit is entirely possible. Start by getting a clear picture of your credit report using services such as Experian and then develop your strategy. Your financial future depends on it.

Tools we use to track this

Pull all three reports free at AnnualCreditReport.com, then keep eyes on them between pulls. WalletHub Premium gives free scores with 3-bureau monitoring, dark-web scanning and identity-theft insurance, and SmartCredit adds ScoreMaster reports so you can see which payment moves your score before you make it. Both are affiliate links — see our affiliate disclosure.