How Medical Debt Can Affect Your Credit Ratings and How to Minimize the Impact?

Health-related costs are always on a rise and it is a common scenario where most of the insurance companies step aside from taking responsibility for funding the bills. There are millions of people with different conditions or health emergencies in the world that force them to opt for multiple appointments with several health professionals, which makes it really tough to keep an exact track of the bills. According to a survey, it was evaluated that most Americans bring their savings in the motion to cover these bills or they opt for multiple loans, which ultimately leaves them with an outstanding amount of medical debt.

While you think of the worse setbacks of medical debt, it should be brought under the light that medical debt can bring your credit score to the ground. Not taking care of your medical bills on time can have a poor effect on your credit report. Generally speaking, medical institutions and health professionals do not report debts to credit establishments and bureaus. Instead, they opt for a debt collector or agency to take care of the unpaid bills. Here is how medical debt and the collections can affect your credit scores:

Health-Related Debts in Collections – How Bad Is It For Your Credit Rating?

Even though you have different credit scores instead of one, they all can be affected in several manners. According to, the newest addition is the FICO score’s latest version FICO 9, which neglects paid collection accounts and the medical collection accounts weigh less under the model. Apart from that, the most widely applied FICO model is the FICO 8 that analyzes every small collection account, which has an original balance exceeding $100. Although it sounds great for most small medical and health-related bills, it is not the same scenario for all of them. Besides, the Vantage Score 4.0 differentiates health-related collections from other various types of debt collection accounts while charging fewer penalties on health collections compared to those of the non-medical ones.  On the other hand, some credit scores make life a bit convenient for people with health-related debts, most of the lenders still avail the previous versions of credit scores under which medical collection fail to receive any sort of special treatment. This is the very reason why creditors are more likely to view collection accounts negatively when you apply for insurance, loans or credit.

Nevertheless, medical debts do not have to destruct your credit or dishearten you, and here are a few steps that you implement to lower the negative impact:

Follow Up with Your Medical Bills

It is a common scenario where the person itself has no idea how much they owe, thanks to the various insurance quirks, deductibles, and co-pays, resulting ultimately in health-related debts going unpaid. Needless to say, you have to stay on top with your medical bills and follow up with the insurance firm or your healthcare provider after visiting the hospital and doctor to find in case you have a balance. Even if you own a decent health insurance, do not simply sit back and assume that everything will be easily taken care of on its own. Make it a habit to paying heed to the mailbox for any bills that are dropped along with the Explanation of Benefits from your respective insurance service provider that generally informs you of what you owe after they have settled the payment.

Carefully Review EOB

As mentioned above, it is important to keep yourself notified of the existing EOB or Explanation of Benefits. These are statements provided by the health insurance establishments that highlight the details of the payment done on your behalf regarding the health treatments and other medical services. The reason why you should emphasize more on thoroughly reviewing the EOB is that it includes balances if there is any, which accounts you responsible for making the payment. Make sure that you are spending the time to carefully read the document and quickly contact your healthcare provider, as well as, your insurance company in case a bill has not been settled yet.

Request for an Itemized Bill

An itemized bill can be defined as a listing that highlights of what you have been charged so far, making it a lot easier for you to validate and understand compared to a lump sum. An itemized bill will aid you in validating that you are being correctly and ethically charged. Apart from that, the biggest benefit of having an itemized bill in hand is that it equips you with an opportunity to negotiate the net payment with your health care provider. Also, if you find any sort of discrepancy in the balances, you can always connect with either your insurance firm or the provider to ensure that they correct it prior to the payment.

Negotiate with Collectors

Meanwhile, in case you are notified of a health care services bill by a collection agency, request them not to report it if you can make the payment in real time. There are few agencies that do not report the bill if it gets resolved quickly. Besides, make sure that the bill you are notified of is something you actually owe and not a fraud. Also, if you are finding it difficult to negotiate with the collectors, you can always seek outside help from institutions that offer national debt relief programs. When it comes to negotiating with the collectors, make sure that you always aim for getting the item removed from your credit report or else it will do no good to your scores.

Pay Heed to Your Medical Debts

Talk to your health care provider and try working out on a debt payment plan especially when you are aware ahead of time that you will not be able to settle the entire bill on time. For this, you are required to keep a track of your medical debts actively, which calls for a routine communication with both your provider and the insurance company.


Sometimes, you are not being able to understand or know when your health bills get piled up and transferred to the collections. Hence, ensure reviewing your credit reports on an annual basis and monitor your credit scores effectively.