How Medical Debt Impacts Credit Score

According to the Consumer Finance Credit Bureau, $88 billion dollars in medical debt are currently in collections, affecting the credit of around 43 million Americans. Are you one of them or worried you may become one? Read on to learn how medical debt impacts credit score and what to do about it.

What is the Medical Debt Relief Act?

The Medical Debt Relief Act of 2021 was introduced in order to help lessen the pressure medical debt places on American families. The act stipulated that credit bureaus would have to provide a one-year grace period before adding medical debt to credit reports and paid medical debt would no longer impact credit. Because the credit agencies decided to enact these changes on their own, the act has been stalled.

Thanks to the changes credit agencies made on behalf of the American people, the following is now true:

  • Small Medical Debt Doesn’t Count. Starting in January of 2023, outstanding medical bills that total under $500 will not be added to credit reports.
  • There’s a Grace Period. As of July 2022, the main three credit bureaus in the US (Experian, TransUnion, and Equifax) will give you a one-year grace period before adding unpaid medical debt over $500 to your credit report.
  • Paid Medical Debt Won’t Impact Your Score. Since July of 2022, paid medical debt will have no impact on your score. This is a welcome relief for those who had paid medical debt from the last seven years, as it previously appeared on credit reports!

Do Medical Bills Change Your Credit Score?

Despite all the changes that the credit bureaus recently implemented, medical debt can still have an impact on your credit score. If you have unpaid medical debt over $500, it can be added to your credit report after one year and will cause your credit score to go down. Just one outstanding medical bill can send your credit score down 100 points, making it difficult for you to apply for credit or a loan in the future. This is particularly frustrating if you had worked hard to build and maintain good credit in the past!

Damage to your credit score is not the only effect medical debt can have on your financial situation. A survey conducted in 2022 by found that one-in-four Gen Z or Millennial Americans with medical debt were forced to defer rent or mortgage payments due to their healthcare bills. Medical debt has serious implications, so it’s important to tackle it right away.


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How Long Does Medical Debt Stay on Your Credit Report?

In most cases, medical debt will remain on your credit report for seven years before it is removed. That doesn’t mean that you are completely free from medical debt after that time, however. Even if outstanding medical bills won’t impact your credit score any longer, you’re still responsible for them. Collections agencies may continue to pester or even sue you for the amount owed.

What if Your Medical Bills Go to Collections?

In order for medical debt to appear on your credit account, it needs to be reported to credit agencies. Typically it isn’t the medical provider or medical facilities who report medical debt, but the collections agencies who buy outstanding debt from the medical facilities. Then, the collections agency uses all resources at their disposal to pressure you into paying so they make a profit.

One way they do this is by reporting your medical debt to the credit bureaus, knowing that it will put you in the difficult position of having financial problems due to a lowered credit score. Even if you make monthly payments, medical debt in collections can negatively impact your score if it has passed the one-year grace period. This stain on your credit report can then affect you for years to come.

When your medical bills go to collections, you will be hounded by the collections agencies to pay. They may call you by phone regularly, reach out by email, or even prompt you for payment on social media. Depending on the state laws and the collections agency, they may take you to court for not paying off your medical bills. In that case, the pending court case will impact your credit report even more. Knowing how to deal with medical bills in collections is tricky and you likely don’t want to face it on your own!

How Can You Get Medical Debt Off Your Credit Report?

When it comes to avoiding medical debt-related impacts on your credit report or getting rid of medical debt from your credit report, quick, decisive action is key. Here are the steps you can take:

  • Audit Each Medical Bill. As soon as you receive a large medical bill, check over the documents from your insurance company and the medical facility to be sure that all is as it should be. Errors are common in medical bills, and sometimes a small mistake on the part of the medical facility or insurance company can leave you with a huge bill. The trouble with this is reading all the medical jargon and knowing what to look for…
  • Get Medical Bills Covered By Insurance. If you have health insurance and your medical debt is due to a denied claim, the next step is to attempt to get the insurance claim denial appealed and the medical claim This isn’t always possible, but if you believe that your insurance company wrongfully denied a claim, it’s worth taking on the long, arduous fight to avoid medical debt making it to your credit report.
  • Negotiate Medical Debt. If you can’t find any way to get your medical bills covered by insurance, you may have to negotiate down your medical debt to avoid having your bills send to collections. Negotiating with medical facilities usually requires in-depth knowledge of the medical billing system, however, so this can be tough to navigate as the patient.
  • Medical Debt Forgiveness. In some cases, hospitals or other organizations will “forgive” medical debt either by ceasing to pursue payment or by buying out your outstanding medical bills. Since medical debt forgiveness is only provided to certain qualifying patients (hospital medical debt forgiveness programs make their own rules about who qualifies), you cannot count on this option to get medical debt off your credit report.
  • Get a Personal Loan. Taking out a loan or applying to a grant to cover your medical bill is a better option than letting your bills go to collections and consequently tanking your credit score. This may not be possible if your medical debt has already impacted your credit, or if you do not qualify for a grant or loan.
  • Maintain Score Health in Other Ways. Although this won’t take medical debt off your credit score, maintaining healthy credit in other ways is your best chance at minimizing the effects of medical debt on your credit. Pay off your credit cards and loans regularly, don’t get behind on payments, and try not to rely too heavily on credit cards.
  • Pay Off Medical Debt. The simplest way to get medical debt off your credit score is to pay it off, although it’s easier said than done if you’re in a tight financial situation or unable to work due to your health.
  • Get Help With All of the Above. While all of these solutions will help you keep your credit score safe from medical debt, they’re also best carried out by an expert who has the knowledge, time, and energy required to push for an ideal solution. That’s where aJust comes in.

How to Settle Medical Bills Before They Impact Your Credit

The best way to settle medical bills before they impact your credit is to get help from aJust, who can take over negotiations to ensure that your medical bills never have the chance to turn into medical debt that will impact your credit score. Using their in-depth experience, aJust can help get your denied claims covered by insurance or expertly lower your bills to a more affordable rate.


Wondering how to settle a medical bill before it impacts your credit? See how aJust can help by filling out this two-minute form.