The amount of debt you owe directly affects your credit, which is why it makes sense to think that medical debt can also hurt your credit score. Fortunately, medical debt isn’t treated like other types of debt and may not even show up on your credit report at all.

That being said, medical debt still has the potential to affect your credit score. This is especially true when you leave your debt unpaid and your medical provider sends your account over to a debt collections agency.

How Medical Debt Affects Your Credit Score

When you open an account, such as a credit card or a loan, it will show up on your credit report along with the account activity, which includes your paying history, as well as any outstanding balances.

Most medical providers, however, typically don’t report medical bills to the credit reporting bureaus(Experian, Equifax, and TransUnion). In other words, medical debt may not appear on your credit report and won’t affect your credit score.

However, this changes if you become extremely delinquent on your medical debt. When you miss multiple consecutive payments towards your medical debt, your medical provider may decide to sell your debt to a collections agency.

Once a collections agency receives the account and reports the debt, your medical bills will now appear on your credit report. Unfortunately, an account in collections is one of the worst items you can have and can significantly hurt your credit score.

Can Medical Debt In Collections Be Removed From Your Credit Report?

If the account is reported accurately, you won’t be able to remove medical debt in collections from your credit report. In fact, the Fair Credit Reporting Act (FCRA) requires that it stays on record for up to 7 years.

Fortunately, you can reduce the impact of medical bills in collections by settling the debt. While paying a collections account won’t remove it from your credit report, doing so may positively impact your credit score.

Newer credit-scoring models, such as FICO 8 and VantageScore 4.0 ignore collection accounts with a “paid” status. Lenders also look at paid collections more favorably than unpaid ones, which may help you qualify for a credit card or loan.

Will Paying Your Medical Bills On-Time Help Improve Your Credit Score?

If your medical provider doesn’t report your medical bills to the credit bureaus, they won’t report your payments, timely or otherwise, as well. This is the same reason why your rent and utility payments don’t normally appear on your credit report.

With that said, however, a service, such as UltraFICO or Experian Boost, allows you to report non-credit bill payments to the credit bureaus. By using a reporting service, your medical bill payments will appear on your credit report and will be considered when your credit score is calculated.

The Bottom Line

Medical debt, unlike traditional credit debt, typically won’t affect your credit score. The reason? medical debt doesn’t show up on your credit report until your medical provider sends your account to collections, which only happens if you default on your payments.

Luckily, there are many ways to maintain and even improve your credit score while managing medical debt. One of these is credit restoration, the legal process of removing negative information from your credit report.

Call us at 888-799-7267 to schedule a Free Credit Consultation.