How Do Unpaid Medical Bills Affect Your Credit Score?

If you're buried beneath medical debt and struggling to pay it, you may be suffering from a new pain point — panic as you wonder how unpaid medical bills affect your credit. Fortunately, the Consumer Financial Protection Bureau (CFPB) enacted a rule on Jan. 7, 2025, that bans medical bills from being included on credit reports that lenders use. The rule will also remove billions of dollars in existing medical debt from credit reports for nearly 15 million Americans.

Here's how medical bills affect your credit score and what changes you can expect when this new rule takes effect on March 17, 2025.

How do medical bills affect your credit report?

Medical bills no longer affect credit reports used by lenders.

In January of 2025, the CFPB amended Regulation V, best known for implementing the Fair Credit Reporting Act, to include a new rule about consumer credit reporting and medical bills. This rule bans the following: 

• Consumer reporting agencies from including medical debt on credit reports used by lenders.
• Lenders from using medical information of any kind in lending decisions.

The rule also further restricts how much medical information creditors have access to in general, preventing them and debt collectors from leveraging credit to pressure people to repay medical bills they don't truly owe (since medical bills are often inaccurate).

When this rule officially takes effect in March of 2025, the CFPB predicts that 15 million people will have medical bills removed from their credit reports. If you have medical debt in your history, that will include you. The bureau estimates that credit scores will increase by an average of 20 points for those included in this pool, and a total of $49 billion in medical debt will fall off of reports.

How the law has changed

If this is all news to you, that's because the law has changed a lot on this subject in recent years.

In the wake of mounting consumer medical debt, the government started rolling out legislation in 2022 to shield consumers from certain exorbitant medical costs and surprise bills. The No Surprises Act, which took effect in 2022, set restrictions on how much health providers can charge insured individuals for different services and prevented credit reporting agencies from including invalid medical debt — or debt deemed to violate limits for certain expenses, like out-of-network fees for services performed in in-network facilities — on consumer credit reports. 

Following this, all three credit reporting agencies, Experian, TransUnion, and Equifax, also removed medical debts that had already been paid from credit reports. They removed medical collections of less than $500 and those less than a year old, too.

Before these laws, unpaid medical expenses could be turned over to a collection agency, which could then contact you directly to seek payment. If you failed to pay, the debt could be reported to the credit reporting bureaus and included in your credit. This weighed credit scores down for many consumers for as long as seven years and was even used as a factor in lending decisions, preventing thousands from borrowing money. 

Credit reporting agencies often waited 180 days before adding medical debt to a credit report to prevent reporting errors and illegitimate expenses. So you never would have seen medical bills on your credit report if you paid them within this window or had charges removed before then.

What about old medical bills you're still repaying?

If you have medical debt on your credit report from years ago, it might drop off your credit if you owe the money directly to your healthcare provider or a collections agency. However, if you borrowed money to cover medical costs and are still paying off those balances, they'll likely remain on your report.

Medical debt you've paid off with a personal loan, HELOC, credit card, or another form of credit you're still repaying won't go anywhere. In other words, you'll still be on the hook to repay the balances on the loan or line of credit.

Once your debt is paid, check your credit report

If the changes we've talked about will affect medical bills on your credit report, you want to be sure your credit history and credit reflect this new information.

We recommend checking your report with all three major bureaus. You can get a copy of your credit report for free once a year from AnnualCreditReport.com.

What to do if you can't pay your medical bills

Just because medical bills won't impact your credit as much doesn't mean you shouldn't repay them. These debts can still be sent to collections and won't disappear because they don't impact your credit score. 

If you know that you won't be able to keep up with your medical bills, consider the following steps you can take before the debt makes its way to collections:

• Check your bills carefully: Ask for an itemized copy of medical bills and make sure everything looks accurate and reflects the services you've received. You should also check with your insurance company about expenses you suspect should be covered since sometimes the way a service is coded can impact coverage and cost you more or less.
• Negotiate: It's possible to negotiate medical debt. You can work on your own or with a debt settlement professional to attempt to negotiate your medical debt for less than you owe. Creditors and debt collectors would rather receive a portion of your debt than none. If you're considering this process, we suggest beginning as early as possible to avoid the account being sent to collections.
• Set up a payment plan: Call your medical provider and ask about payment plans that would make it possible to stretch your repayments out over time. Many will be willing to set up an interest-free repayment schedule with you if it makes you more likely to pay off your balance.
• Discuss any hardship: If you have a verifiable financial hardship, you may be eligible for medical debt forgiveness. The provider will ask for documentation to prove your hardship and determine your eligibility.

Don't be afraid to dispute inaccuracies

If you see unpaid medical debt on your credit report, dispute the errors online, by mail, or by phone with TransUnion, Experian, and Equifax. This forces the collection agency to validate the debt.

Once a dispute is resolved, you should be updated on the outcome of the reinvestigation process, which may be "accurate as reported," "the item has been removed," or "the item has been modified."

Unpaid medical expenses can cause financial and emotional stress, resulting in struggles with how to manage your money. But changes to regulations mean medical debt will no longer impact credit scores or lending decisions.

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