Tessa Quinn
Late hospital bills can affect your credit score, but only if they remain unpaid and are sent to a collections agency. Medical bills that have been paid will not appear on your credit report or impact your credit score. The three major consumer credit bureaus—Experian, Equifax, and TransUnion—will now give you a one-year grace period before placing unpaid medical collections debt on your credit report. This means that unpaid medical bills won't show up in your credit history until you're at least 365 days late. Unpaid medical debt over $500 can stay on your credit report for up to seven years from the first missed payment, but paying it off can get it removed sooner.
| Characteristics | Values |
|---|---|
| Medical debt's impact on credit score | Medical debt can negatively impact your credit score. Unpaid medical collection accounts over $500 can remain on your credit report for seven years. However, paid medical collections do not appear on credit reports. |
| Changes in policy | In 2023, the three main credit bureaus (Experian, TransUnion, and Equifax) stopped including medical debt under $500 in credit reports. In 2025, the Consumer Finance Protection Bureau approved a new regulation that prevents nearly all medical debt from appearing on credit reports. |
| Strategies to manage medical debt | It is recommended to review medical bills for accuracy and contact your insurance company and healthcare provider to resolve any issues. Healthcare providers may be willing to negotiate deals or offer discounts. Organizations like Undue Medical Debt and the Patient Advocate Foundation work with individuals to pay off medical debts. |
| Medical debt as a unique challenge | Medical debt is unique as it arises from unpredictable and complex circumstances, and patients are highly dependent on medical professionals. Additionally, billing practices can be confusing and challenging to navigate. |
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What You'll Learn
Medical debt and credit scores
Late hospital bills can affect your credit score. However, since most healthcare providers do not report to credit bureaus, your debt would have to be sold to a collection agency before it appears on your credit report. Even after your bill goes to collections, the account won't show up on your credit report right away, or possibly ever. The three main consumer credit bureaus—Experian, TransUnion, and Equifax—give you a 365-day waiting period to resolve any medical debt before the collection account appears in your credit history. So, medical bills won't impact your credit score right away if they are unpaid or ever if you pay them within a year.
Unpaid medical collection accounts over $500 can remain on your credit report for seven years after they become delinquent. However, once they are paid, they will be removed from your report. Paid medical collections do not appear on credit reports at all, but larger unpaid medical collection balances can cause a credit score decrease.
In April 2023, the three main credit bureaus—Experian, TransUnion, and Equifax—stopped including medical debt under $500 in credit reports. Outstanding balances over $500 could still appear on your credit report for seven years, the same as any other kind of debt.
In January 2025, the Consumer Finance Protection Bureau approved a new regulation that prevents nearly all medical debt from appearing on credit reports, no matter the amount. The rule also prohibits lenders from using medical information in their lending decisions. The CFPB estimates that the rule change will remove $49 billion in medical bills from the credit reports of about 15 million Americans. It is expected that this will lead to a rise in the credit scores of people with medical debt by an average of 20 points.
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The impact of late hospital bills on credit reports
Late hospital bills can have a significant impact on credit reports and, by extension, an individual's financial health. Medical debt is unique in that it often arises from unforeseen circumstances, such as accidents or unexpected illnesses, and patients are usually dependent on medical professionals to guide their treatment. As a result, medical expenses can be substantial and unexpected, leading to financial strain.
In the past, unpaid medical bills were the leading source of debt reported to collections agencies, with about 15 million people in the US facing this issue. Medical debt was also the most common type of debt reported on consumer credit records. This situation was exacerbated by high healthcare costs, billing errors, and a lack of adequate insurance coverage. The accumulation of medical debt was particularly prevalent in the United States compared to other high-income countries.
Recognizing the challenges posed by medical debt, recent regulatory changes have been implemented to alleviate the burden on individuals. As of March 2023, the three major credit reporting agencies—Equifax, Experian, and TransUnion—no longer include medical collections under $500 on credit reports. This change alone eliminated nearly 70% of medical collection debt from credit reports. Additionally, as of January 2025, a new federal rule was enacted to ban the inclusion of any medical debt on credit reports, regardless of the amount. This rule also prohibits lenders from using medical information in their approval decisions.
Despite these positive developments, late hospital bills can still impact credit reports for those with outstanding balances over the $500 threshold. Unpaid medical collection accounts over this amount can remain on credit reports for up to seven years, negatively affecting credit scores. However, once these debts are paid, they will be removed from the credit report, potentially improving the credit score.
It is important to note that even with these changes, individuals should still prioritize paying their hospital bills on time to avoid any potential negative consequences on their credit reports and financial health. Quick action is key, and individuals should review their medical bills for accuracy and promptly resolve any issues with their insurance company and healthcare provider. Healthcare providers are often willing to negotiate alternative payment solutions to ensure they receive at least a partial payment.
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How to prevent late hospital bills from affecting your credit score
Late hospital bills can negatively impact your credit score. However, there are several ways to prevent this from happening. Here are some steps you can take to protect your credit score:
Review your medical bills:
As soon as you receive a medical bill, review it carefully to ensure its accuracy. Contact your insurance company and healthcare provider to resolve any discrepancies or issues. Follow up until you have confirmation that the bill has been paid.
Communicate with your healthcare provider:
If you anticipate difficulty in paying your medical bills, be proactive and communicate with your healthcare provider. Healthcare providers are often willing to work with patients to find alternative solutions. They may offer payment plans or discounts if you agree to pay a lump sum or make a large down payment.
Seek financial assistance:
If your medical bills are overwhelming, consider seeking financial assistance. Organisations like Undue Medical Debt and the Patient Advocate Foundation work with individuals to pay off medical debts. You may also be eligible for free or reduced care through hospital charity care or discount payment policies, especially if you are uninsured or have high medical costs.
Prioritise payment of medical debts over $500:
Unpaid medical collection accounts over $500 can remain on your credit report for up to seven years and negatively impact your credit score. Therefore, prioritise paying off these larger debts to prevent long-lasting damage to your creditworthiness.
Advocate for employer-sponsored reimbursement:
If your employer offers a group health plan, advocate for a health reimbursement arrangement (HRA). With an HRA, your employer can reimburse you for out-of-pocket expenses not covered by your plan, giving you better control over your medical bills.
Stay vigilant and act quickly:
Medical bills may take time to show up on your credit report, but once they do, the damage can be long-lasting. Stay vigilant and act quickly to address any outstanding medical debts. Remember that even after your bill goes to a collection agency, you have a 365-day waiting period to resolve the debt before it appears on your credit history.
By following these steps, you can prevent late hospital bills from affecting your credit score and maintain your financial credibility.
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The role of debt collection agencies in reporting medical debt
Late hospital bills can affect your credit score. Unpaid medical debt that is sent to a collection agency can negatively impact your credit score. Medical debt is handled differently than other types of consumer debt. Most healthcare providers do not report to credit bureaus, so your debt would have to be sold to a collection agency before it appears on your credit report.
Debt collection agencies purchase debt from healthcare providers and then attempt to collect it through various means, such as letters, emails, or phone calls. If the debt remains unpaid, it can be sold to another collection agency or reported to a credit bureau, which can negatively impact your credit score. The time it takes for a debt to be sold to a collection agency varies, but it generally occurs after 60, 90, or 120 days of non-payment. The three main consumer credit bureaus (Experian, TransUnion, and Equifax) give a 365-day waiting period to resolve any medical debt before the collection account appears in your credit history.
In recent years, there has been a push to reduce the impact of medical debt on credit scores. The Consumer Financial Protection Bureau (CFPB) finalized a rule in January 2025 that bans the inclusion of medical debt on credit reports and prohibits lenders from using medical information in their lending decisions. This rule removes an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. Additionally, the two major credit scoring companies, FICO and VantageScore, have also changed how medical bills impact their scoring methods, with VantageScore removing all medical debt from its calculations and FICO reducing its impact.
Despite these changes, unpaid medical debt that is sent to a collection agency can still negatively impact your credit score. It is important to review your medical bills to ensure their accuracy and resolve any issues with your insurance company and healthcare provider. If you anticipate trouble paying a bill, it is recommended to contact your healthcare provider to discuss alternative solutions or payment plans. Organizations like Undue Medical Debt and the Patient Advocate Foundation work with individuals to pay off medical debts.
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Consumer rights and protections regarding medical debt and credit reporting
Late hospital bills can affect your credit score. Unpaid medical debt is handled differently from other types of consumer debt. Most healthcare providers do not report to credit bureaus, so your debt would have to be sold to a collection agency before it appears on your credit report. Even after your bill goes to collections, the account won't show up on your credit report right away, or possibly ever. The three main consumer credit bureaus—Experian, TransUnion, and Equifax—give you a 365-day waiting period to resolve any medical debt before the collection account appears in your credit history. So, medical bills won't impact your credit score right away if they are unpaid or ever if you pay them within a year. Unpaid medical collection accounts over $500 can remain on your credit report for seven years after they become delinquent. However, once they are paid, they will be removed from your report.
In January 2025, the Consumer Financial Protection Bureau (CFPB) approved a new regulation that prevents nearly all medical debt from appearing on credit reports, regardless of the amount. The CFPB estimates the rule change will remove an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. It will also improve privacy protections and prevent debt collectors from using the credit reporting system to coerce people to pay bills they don't owe. The bureau reports that, even though it leads to thousands of denied loan applications annually, medical debt is a poor predictor of a borrower's creditworthiness. Americans with medical debt on their record could see their credit score rise by an average of 20 points as a result of the rule change, and approximately 22,000 more mortgages will be approved each year.
The two major credit scoring companies, FICO® and VantageScore, also changed how medical bills impact their scoring methods: VantageScore removed all medical debt from its calculations in January 2023, while FICO reduced the impact it has on your score. The CFPB’s final rule brings regulations in line with Congress’s decision to safeguard consumers’ privacy by restricting lenders from obtaining or using medical information, including information about medical debts. Federal financial regulators later created an exception to this restriction, allowing creditors to consider medical debts. This carveout has enabled debt collectors to use the credit reporting system to coerce payments from patients for inaccurate or false medical bills.
The CFPB is a federal agency that protects people from unfair treatment by banks, credit reporting agencies, and lenders. It creates and enforces rules to help make the financial system safer and more transparent for consumers. The Bureau was created in response to the 2008 financial crisis to ensure consumers have a voice in financial decision-making and regulatory oversight. As of December 2024, the CFPB had secured over $21 billion in relief for consumers through debt cancellation, reductions, or monetary compensation resulting from its enforcement actions.
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Frequently asked questions
Late hospital bills can negatively impact your credit score. Unpaid medical collection accounts over $500 can remain on your credit report for seven years. However, this varies depending on the credit reporting agency and the state.
Quick action is key. As soon as you get a hospital bill, review it and contact your insurance company and healthcare provider to resolve any issues. If you cannot afford to pay, speak to your healthcare provider to see if you can work out a payment plan or negotiate your bill.
Medical debt on your credit report can impact your ability to buy or rent a home, raise the price you pay for a car or insurance, and make it more difficult to find a job.
Most medical providers will not sell the debt to a collection agency until you are 60, 90, or even 120 days past due. You will receive letters, emails, or phone calls from the debt collection agency attempting to collect payment.
