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Does Medical Debt Affect Your Credit Score?

Medical debt is a prevalent issue in the U.S. An estimated 41% of Americans have some sort of healthcare debt, according to a 2022 report from the Kaiser Family Foundation. If you also belong to this group, you may worry about the effect your medical bills can have on your credit.

Fortunately, healthcare debt doesn’t carry as much weight as other types of debt and it usually doesn’t affect your credit unless it’s sent to a collection agency. CNBC Select explains how medical bills can influence your credit score and what you can do if you’re dealing with this type of debt.

Do medical bills affect your credit?

How medical debt can impact your credit score

Fortunately, your healthcare bills won’t harm your credit, as long as you don’t wait too long to settle them. Most of the time, you’re dealing with the medical provider directly and they aren’t likely to report your payment activity (or lack thereof) to the credit bureaus. This means that while you owe the provider, your credit report won’t reflect this debt.

Of course, the provider won’t wait for you to pay forever. If your bill becomes significantly past due, they’re likely to sell it to a debt collector. When this happens can vary and depends on the healthcare office’s practices. Generally, you can expect your bill to go to collections after 90 days of non-payment. That said, some providers will only give you 60 days, while others will wait 180 days before turning your debt over to a collector.

Even after that, not every unpaid medical debt will end up on your credit report. Effective April 2023, the three credit bureaus — Experian, TransUnion and Equifax — removed all unpaid medical debt that had an initial balance below $500 from credit reports. Any new medical collections under $500 also won’t appear on credit reports as well.

If your medical debt is over $500, you still have time. Specifically, the credit bureaus provide a 365-day waiting period before unpaid medical collections appear on a consumer’s credit record. This grace period offers an opportunity to resolve the issue by working with an insurance company or figuring out other means to pay. Paid medical collections don’t appear on credit reports.

Once the waiting period is over, the collection account will pop up on your credit profile. Unless you pay the collectors, it will stay there for seven years and can negatively affect your scores.

How to check for medical debt on your credit report

If you’re worried you may have medical debt on your credit record, don’t wait to have your fears confirmed by a debt collector.

By law, you’re entitled to a free copy of your credit report from each bureau once a year. And currently, you can get free weekly credit reports at AnnualCreditReport.com.

Alternatively, you can use a free credit monitoring service. CNBC Select recommends CreditWise® from Capital One which allows you to check accounts and balances on your TransUnion credit report, including closed accounts and collections. Note that you don’t have to be a Capital One cardholder to use the service.

Experian Dark Web Scan + Credit Monitoring is another excellent option. It’s also free and you get an updated Experian credit report every 30 days.

Experian Dark Web Scan + Credit Monitoring

On Experian’s secure site

  • Cost

  • Credit bureaus monitored

  • Credit scoring model used

  • Dark web scan

  • Identity insurance

If you see medical collections on your credit report, first make sure they belong there. Anything under $500 and less than one year old shouldn’t appear on your record. If you find any inaccurately reported medical debt, you can dispute the debt and (hopefully) get it removed.

But if the debt legitimately belongs on your report, the only way to deal with it is to pay it off.

What to do if you have medical debt

Whether you’ve just received a bill you can’t afford or it’s already made its way to collections and your credit file, you have options to get your finances back on track.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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