Do unpaid medical bills count against your credit score?

bureaus (some medical institutions report such debts, others don�t).

However, the impact of those outstanding expenses won�t necessarily be

devastating to your credit score.

bills can affect your credit score, but the impact will likely be

negligible. Equifax is far more lenient regarding medical bills, as

opposed to a debtor who went on a reckless shopping spree and ran up

exorbitant charges they then couldn�t pay.

those debts won�t weigh all that heavily against you. According to

Equifax, that shouldn�t have any significant impact on your score and

shouldn�t affect you if you are, say, hoping to get a home loan.

the specifics of your illness or treatment.

TransUnion, replied to my inquiry. Here�s his response:

voluntary. Some medical institutions may report the status of a

person#039;s financial obligation or account to the credit bureaus, which

in turn could be reflected on a person#039;s credit report and score.

agency and the collection agency reports information to the credit

bureaus, or if an unpaid medical debt results in a judgment or lien

being filed, then that information similarly could be included on a

person#039;s report and reflected in the score.

financial obligation or collection account to anyone with a

permissible purpose under the law to view a person#039;s credit report.

name are masked from display to anyone but the consumer himself,

except where the law expressly permits disclosure of that information

and where the consumer#039;s consent has been obtained by the user of the

I have several unpaid medical bills which I am unable, and unwilling to pay for various reasons. Do they count against me? I was told they do not. Some of the bills are from when I was a minor, others are for services I did not request or need.

Update: To the person who made the trailer park statement. I guess you are one of those trust fund kids who have everything handed to you on a silver platter, if so, goody goody. I work hard for a living little boy, take a step out into the real world once in a while.

Can Unpaid Medical Bills Affect Credit Report #038; Scores

Medical debts credit score

Can unpaid medical bills appear on your consumer report and affect your credit score? This question requires a two-part answer.

First, you have to determine which types of medical bills providers send along to the consumer bureaus, and when it finally displays on your file. Most providers do not report the information themselves.

They refer the account to a collections agency, who then does the dirty work.

Second, if your medical debt does appear on your consumer report, it hurts your credit score until you pay the amount in full. Each model version treats the information differently. The credit score impact depends on the frequency, recency, and monetary amount.

Unpaid Medical Bills and Credit Reporting Agencies

Medical bills on credit reports are often bad and never good. The majority never display. Providers do not pass along positive payment history to the bureaus – which would be good. They only communicate about delinquent accounts, most often after sending your file to the collections agency – which is often bad.

You will find unique rules for the display of unpaid medical bills on credit reports, along with common industry practices for doctor offices, hospital, collection agencies, and the legal system.

Do you qualify for debt relief? Just a few days in the hospital can leave patients with enormous medical bills that they cannot possible pay. Deductibles are often very large, and many people remain uninsured – despite the Affordable Care Act. Combine the extra expenses with lost income and patients quickly experience financial hardship. If you owe more than $10,000 to a hospital or doctor, you could qualify for a settlement program.

The medical billing process is complex and involves a third party payer – the insurance company. Insurance companies often inject delays, which has no bearing on the credit worthiness of the patient. Therefore, the bureaus handle the negative payment history differently than data reported by traditional lenders.

  1. The bureaus will not display medical debt on a consumer report until 180 days after the first bill from the doctor, dentist, or hospital.
  2. If the insurance company ultimately pays the medical bill, the agency must delete the negative information.
  3. If you the consumer pay the bill, the agency updates the trade line to “paid in full.”
  4. The negative history automatically ages from your file (paid or unpaid) seven years after the date of your first delinquency.

State and federal laws will sometimes further alter the display of medical debt on credit reports.

Dentist and doctor rarely report unpaid bills to the credit bureaus. It is very unlikely that their accounts receivables will show up on your consumer file – unless they refer your account to a collection agency.

Dentists and primary care physicians are often small businesses who rely on repeat visits from patients. As a small business, they do not have the software and systems needed to meet the bureau Metro reporting standards. Loyal repeat patients may not appreciate having a delayed insurance claims payment staining their consumer report.

Any effort to make payment on your outstanding balance is the best way to keep your dentist or doctor from referring your account to the collections agency.

Hospitals are far more likely to report unpaid bills to the credit bureaus – or refer the debt to a collection agency who will. Hospitals are large impersonal corporate entities with fewer repeat customers. Their bills are often quite larger as well. They have more to gain and less to lose by aggressively pursuing collections.

Hospitals often run their own collections departments. The largest systems may have the scale to build and maintain the software needed to meet bureau Metro reporting standards. Others refer accounts to collection agencies who specialize in disseminating this information to the bureaus.

Once again, making even small installment payments on your outstanding balance is the best way to keep the hospital from sending your account to a collections agency.

Collection agencies frequently report medical debts to the credit bureaus. The threat of having this negative information displaying on your file is one lever that collection agencies often pull. Many consumers will quickly pay in full to keep this information from ruining their record.

Collection agencies specialize in reporting negative payment history to the consumer credit bureaus. They have the systems and software necessary to meet the bureau Metro reporting standards. They frequently disseminate the information after first contacting the consumer.

Keep your doctor or hospital from referring your account to the collection agency by making even partial payment. Failing that, answer the phone when the collection agency calls, and cooperate in settling the amount owed. This is the best way to keep medical debt off your credit report.

Medical Debts in Public Records

Medical debts frequently appear on credit reports in the form of public records. The threat of taking you to court and seizing your assets is a second lever that collection agencies often pull. Many consumers will quickly pay in full in order to avoid a lawsuit.

Public records stay on your credit report for seven to ten years after the filing date. Since the filing date often occurs years after you initially fall behind, the negative history remains much longer.

Your medical debt can appear on your credit report as a judgment if the collection agency wins a lawsuit. The court will issue a judgment to place a lien against your personal property (wages, house, or car) in an attempt to recoup the money.

Judgments are public records, which display on consumer records for seven years beginning from the filing date. Note that the filing date could be many years after the first billing date from the doctor or hospital.

Your medical debt can appear on your credit report in the form of a bankruptcy. Studies suggest that half of all bankruptcies in the United States begin with a health event. Many consumers live check-to-check while healthy. A combination of unexpected medical bills along with lost income from a disability sinks many ships.

You can include medical debt in a bankruptcy discharge. Bankruptcies are public records and will display on your consumer report.

  • Chapter 13 displays for 7 years after the filing date.
  • Chapter 7 displays for 10 years after the filing date.

How Unpaid Medical Bills Affect Credit Scores

If unpaid medical bills do appear on your consumer report, it may affect your credit score. The degree to which it could lower your ratings depends on many factors. Most of the equations treat this information in a similar fashion, with only minor differences.

Therefore, break down the answer to this question by evaluating the common medical bill credit score factors. Then look into the unique ways that the FICO, Vantage, and customized scores treat this negative information.

In general, unpaid medical bills will hurt your credit score. The rating equations all use similar statistical software and methods to analyze data and predict future payment behaviors. Therefore, an objective analysis looking at the same datasets will yield similar score ranking factors.

The negative impact of unpaid medical bills on credit scores depends on three main factors.

  1. Frequency – the number of different providers providing negative payment information is meaningful. The more doctors and hospitals showing an unpaid balance, the more it counts against your score.
  2. Recency – the relative age of the information means something. Newer delinquencies count more than older ones. The information drops from your file after seven years.
  3. Monetary – the amount of money that you owe is a significant factor. Large amounts count against scores more than smaller sums.

Payment history makes up 35% of the average person’s credit score. If you already have a history of late payments on traditional borrowing accounts, one more negative item makes little difference. However, if your other payment history is perfect, and the unpaid medical bill could really damage your rating.

The majority of unpaid medical debts negatively affect FICO credit scores. The Fair Isaac Company develops and maintains the FICO score; the most widely used rating system.

The FICO credit score has many different versions. There are overlay equations unique to certain industries, each of which the company updates periodically. Lenders follow their own schedule on when to move to an updated version.

The FICO 9 version handles the issue differently than earlier versions.

  1. It ignores all paid 3 rd party collection account trade lines
  2. Unpaid medical collection accounts have a lesser negative impact than other unpaid collection accounts.

Likewise, the majority of unpaid medical bills hurt Vantage credit scores. Vantage is a joint venture modeling company form by the big three consumer bureaus to compete with the FICO score.

The Vantage credit score version 3.0 ignores any paid medical collection trades of any size. Unpaid accounts will still count.

Banks and other lenders frequently develop custom credit scores – and they are the most widely used by far. These equations often rely on information on your consumer report. The may also include application data and other non-traditional information sources. Lenders customized these algorithms for their own unique needs.

It is impossible to tell exactly how unpaid medical bills affect these custom credit scores. The banks own the algorithm and do not publicize their existence. Nor do government agencies force them to disclose the details of how they work.

medical debts credit score

Why? - Any kind of debt will affect your credit score. A debt is an owed amount of money. If you owe money you are basically more of a risk to potential creditors.

How? - Your credit score is determined by a unique algorithm which takes into consideration many financial factors. Your debt to credit limit ratio is one of the financial factors considered. Basically, you want to have your debt be as low as possible. If you have a low debt the “algorithm” will view that positively and thus you will receive a higher credit score!

Side note: There are many different types of algorithms, the most common is the FICO Score. There are actually different kinds of FICO scores…

Your credit score soon will get a buffer from medical-debt wrecks

By Michelle Andrews, California Healthline

Posted: 07/16/17, 9:15 AM PDT | Updated: on 07/16/2017

For many consumers, an unexpected healthcare calamity can quickly burgeon into a financial calamity. Just over half of all the debt that appears on credit reports is related to medical expenses, and consumers may find that their credit score gets as banged up as their body.

Changes in the way credit agencies report and evaluate medical debt are in the works that should reduce some of the painful financial consequences of having a health care problem.

Starting Sept. 15, the three major credit reporting agencies #x2014; Experian, Equifax and TransUnion #x2014; will set a 180-day waiting period before including medical debt on a consumer#x2019;s credit report. The six-month period is intended to ensure there#x2019;s enough time to resolve disputes with insurers and delays in payment.

In addition, the credit bureaus will remove medical debt from consumers#x2019; credit reports once it#x2019;s paid by an insurer. (Some credit scoring models don#x2019;t penalize paid medical debt from any source.)

The changes grew out of two efforts by states to aid consumers: a 2015 settlement negotiated by New York Attorney General Eric Schneiderman and the three credit reporting agencies and an agreement shortly afterward between the agencies and 31 state attorneys general. The changes will be instituted nationwide.

The 180-day waiting period is #x201c;a big step forward toward a more equitable process,#x201d; said Julie Kalkowski, executive director of the Financial Hope Collaborative at Creighton University in Omaha, Neb., which provides financial education and coaching to low-income, single mothers.

Rather than attempting to collect past-due medical bills themselves, hospitals and doctors#x2019; offices typically engage collection agencies to dun patients. But the timing on when providers take that step varies widely.

#x201c;Without a standardized process, some bills get sent to collections because they#x2019;re 30 or 60 days past due as opposed to six months,#x201d; Kalkowski said.

Kalkowski said several of the women who went through the Creighton program had doctor bills that were sent to collections before they were 60 days past due. The total amount owed in most cases was under $150, she said.

Forty-three million Americans have medical debt in collections that#x2019;s adversely affecting their credit, according to a 2014 report by the federal Consumer Financial Protection Bureau, the bureau#x2019;s most recent data. The average amount of medical debt in collections was $579, compared with $1,000 for non-medical debt. For 15 million consumers, medical debt was the only blemish on their credit report, the study found.

Perhaps this isn#x2019;t surprising given the growth in the number of people with high-deductible health plans and significant out-of-pocket financial responsibilities for health care, said Chad Mulvany, policy director at the Healthcare Financial Management Association, a membership organization for finance professionals.

#x201c;More people who typically would have been a good credit risk are now saddled with big bills,#x201d; he said.

Lenders use credit reports and credit scores to evaluate the risk that someone won#x2019;t repay a loan. The credit-scoring companies build algorithms that use the data in people#x2019;s credit reports to assign a three-digit credit score, typically between 300 and 850, that summarizes someone#x2019;s credit risk based on the information in a credit report at that time. Higher scores indicate lower risk.

Credit-scoring companies like FICO and VantageScore that develop these models have been adjusting their formulas to account for the fact that medical debt isn#x2019;t necessarily an accurate predictor of whether someone is a good credit risk.

#x201c;Those with medical accounts are less likely to default on their accounts than non-medical accounts,#x201d; said Ethan Dornhelm, vice president of scores and analytics at FICO.

To address this issue, newer FICO and VantageScore models differentiate between medical and non-medical debt. People with medical debt in collections receive a smaller penalty than those with non-medical collections, said Sarah Davies, senior vice president at VantageScore Solutions.

The change can make a difference in people#x2019;s credit scores.

Under FICO9, the newest model, someone whose only major credit blot is one or more medical collections would see their median score increase roughly 25 points over older versions, said FICO#x2019;s Dornhelm.

But there#x2019;s a catch: Many banks and other lenders haven#x2019;t yet adopted the newer versions of the credit-scoring models. So even though medical debt shouldn#x2019;t have as strong an impact on someone#x2019;s credit score now, in many cases nothing may have changed.

What#x2019;s a consumer to do? You can#x2019;t control which scoring model a lender uses, but you can check your credit report regularly to make sure it#x2019;s accurate. Consumers are entitled to a free credit report from each credit reporting company annually.

#x201c;If there#x2019;s medical debt that#x2019;s been paid, it should be removed going forward, and if it#x2019;s less than six months old, find out when it#x2019;s going to be removed,#x201d; advises VantageScore#x2019;s Davies.

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

More stories from John Ulzheimer

It’s high time to explore the impact of medical debt on consumer credit reports and consumer credit scores. On the surface, medical debt is not that different than any other type of unsecured consumer debt. It’s statutorily dischargeable in bankruptcy, can end up on your credit reports, and can have a negative impact on your credit scores.

That being said, that’s where the similarities end. Medical debt, unlike most other consumer debts, is not usually reported to the credit reporting agencies like, say, a credit card account or a mortgage is reported. Also, most medical service providers don’t want to set up payment plans with their patients. You’ve probably seen the ubiquitous sign at most doctor’s offices that reads, “Payment in Full is Due When Services Are Rendered.” That doesn’t mean, “We Extend Credit!!”

Although, just because medical debt isn’t typically reported to the credit bureaus, doesn’t mean it won’t show up on your credit reports, either. If you won’t or can’t pay your medical bills, the service providers will spend a few months trying to convince you to pay by sending statements and past due notices. It#8217;s important to keep in mind that their core competency is being a doctor, not a bill collector.

After a few months of unsuccessful collection efforts, the service provider is simply going to outsource the debt to a 3 rd party debt collector. And, yes, the debt collector will likely report the debt to the three credit reporting agencies. The negative information will remain on your credit reports for seven years from the date the original debt went into default.

The impact of a medical collection on your credit reports is no different than any other type of collection. And this negative information is just as damaging to your credit scores as a credit card collection and other types of traditional consumer debt collections. When medical collections are paid or settled, they are not removed from your credit reports, as some would have you believe.

In FICO’s latest generation of credit risk scoring models, informally known as “FICO 08”, there is a tiny bit of help, but only for consumers who have original collection balances of less than $100. In these small-dollar cases, the FICO score ignores the collection account. This would likely only apply if the consumer’s medical coverage paid an overwhelming majority of the expense or if the consumer wrote a bad check for the deductible.

While it’s impossible to know the exact impact of a medical collection to your FICO scores, I ran a similar scenario on my personal credit report at to test the outcome. My 805 credit score turned into a less-than-impressive 650-695. This would be the same impact regardless of the type of collection, but there’s something important to consider when you’re thinking about my personal scenario.

Most consumers who have collections from defaulted credit cards, broken apartment leases, or other types of delinquencies, have other negative credit information weighing down their scores. Consumers who have medical collections might otherwise have perfect credit reports.

Many medical collections are the result of billing errors or insurance processing snafus and not because of a consumer’s inability or unwillingness to pay. These medical collections are a surprise and not something the consumer is expecting.

Finally, the damage to their good credit scores is going to be significant, when compared to the damage suffered by someone else who already has unrelated derogatory credit information. Credit scores tend to take the path of least resistance, which means it’s easier to turn an 800 into a 650, than it is to turn a 650 into a 450.

Getting Them Removed is Next to Impossible

It would be insulting to simply suggest that you “avoid” medical collections, given that most of us do so already. However, there are scenarios where we know a collection is imminent, and then do nothing to avoid it.

In my 20+ years in the credit industry, I’ve spoken to countless consumers who have medical collections and it’s shocking how many of them knew of an insurance processing or billing error and simply conceded and said they’ll take care of it, only to learn that they (sic) didn’t and now there’s this isolated collection on their credit reports.

Collections are very difficult to get off of your credit reports. In fact, the only way to get them removed is if the original merchant withdraws them or they’ve been filed erroneously. While there are rumors of “pay for delete” deals cut by collection agencies, the credit bureaus make it very clear in their agreements with collection agencies that they are not to remove collections simply because they’re paid. And, doing so could cost them their service agreement with the credit bureaus.

John Ulzheimer is the President of Consumer Education at, the credit blogger for, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of or Intuit. Follow John on Twitter.

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