Do Medical Bills Affect Your Credit?

Do Medical Bills Affect Your Credit?

Medical debt is a sizable problem in the US. According to, half of Americans now have unpaid medical bills, and the number of Americans who have medical debt in collections stands at 46%. A...

Medical debt is a sizable problem in the US. According to, half of Americans now have unpaid medical bills, and the number of Americans who have medical debt in collections stands at 46%. A majority of people are between $1,000 and $5,000 in medical debt and cite reasons including diagnostic tests, hospitalizations, and emergency room visits. 

In addition, according to CNBC, 66.5% of all bankruptcies are filed because of medical issues. The main reason why people go into bankruptcy over medical debt is because the health insurance they can actually afford doesn’t cover all of their bills. 

Medical expenses can take a huge toll on your finances. If you’re dealing with expenses you can’t afford, you may be wondering: Do medical bills affect your credit? By figuring out the answer to this question and getting back on track with your debt, you can ensure a brighter financial future ahead, while still protecting your health. 

How Medical Debt Works

Medical debt can come from anything. Perhaps you got food poisoning and had to be rushed to the emergency room, but your insurance didn't cover your entire visit. Maybe you had to get an emergency surgery or your doctor sent you to an expensive specialist for testing. It’s not like you even knew what you were getting into when it came to your medical costs, considering that your bill came a few weeks or months after your visit. 

Medical debt is often unavoidable, especially if you don’t have insurance. And even if you do have coverage from a health insurance company, perhaps it isn’t enough. You might only have basic coverage that didn’t pay for special services. 

According to the Medical Billing & Coding Certification website, medical bills confuse around 72% of Americans. So if you don’t understand the medical costs that appear on your bills, you’re not alone.

There are 150,000 medical codes being used today. Here are a few that you may see on your bill:

  • HCPCS Level I codes, or CPT codes: These are service codes that have five different numbers that represent the procedures or tests you had done.
  • HCPCS Level II codes, or service codes: These are also called service codes and represent the products or supplies your healthcare provider used during your visit.
  • Revenue codes: These represent the dollar amount tied to a certain procedure.
  • ICD-10 codes: These signify costs related to a diagnosis.

Your medical bill could be split into separate bills from:

  • Hospital expenses
  • A regular provider visit
  • A specialist visit 
  • A home health care visit 
  • An ambulance 

Hospitals and providers may do things differently, but one thing is true: it’s always worth it to take the time to research your bill. 

The Importance of Understanding Your Bill

If your bill is confusing, you can always reach out to your provider and ask for help understanding it. Then, you’ll know if the charges are all legitimate. 

According to ABC News, insurance companies hired a group of auditors to look over hospital bills, and they found errors in more than 90% of the bills. Additionally, an Equifax audit revealed that hospital bills that totaled more than $10,000 included a $1,300 error, on average. 

When you receive your bill, ask the medical billing department and/or your health insurance provider to explain it to you. You can also check out helpful resources like VeryWell Health’s article “How to Read Your Medical Bills” and AARP’s “Learn How to Read Your Medical Bill.”

Moreover, it’s a good idea to request an itemized list of services provided in a bulleted list if possible. 

What If I Can’t Pay My Medical Debt?

If you can’t pay your medical debt, don’t fret; you have a few options…

First, contact your service provider to see if you can create a payment arrangement. In many cases, you can send in a monthly payment until you fully pay off your medical debt. That way, you’ll show your provider that you’re taking care of your unpaid medical bills and that they shouldn’t send you to medical collections. 

Possible Tip: Make sure you ask for a 0% interest rate plan with your healthcare provider so your medical debt doesn’t continue to grow. 

Many hospitals also offer debt relief based on your household income. If you don’t make enough money to cover your bills, you could apply for this program through your service provider. 

If you understand your bill, then you can call up the service provider and negotiate with them. Perhaps you spotted an error or were overcharged for a service. Explain why your charge should be taken off your bill.

Nonprofits like the HealthWell Foundation and Patient Access Network Foundation can help you with your bills if you meet their requirements.

Additionally, you could start a campaign on a donation site like GoFundMe and raise money from friends and family to reduce your medical expenses. 

You have options when it comes to credit cards, too. If you have a good credit score, you could apply for a 0% interest credit card promotion to cover your medical expenses. Just make sure that you pay off your credit card bill in full before the 0% introductory period ends. 

Do Medical Bills Go to Collections?

If you don’t pay your unpaid medical debt within the repayment window, your service provider could send it to a collection agency. Suddenly, you may start receiving tons of phone calls and letters from a debt collector trying to get you to pay.

Also, a debt collector could potentially garnish your wages if they get a court order to do so. They can take you to court and sue you if they believe you’re not going to pay. 

When your medical debt gets to this point, you have a few options:

  • Start a payment plan with the collection agency.
  • Negotiate to settle with the collection agency. (Sometimes you can cut down how much you owe.)
  • If the collection agency is charging you interest on the debt, you may be able to get a loan with a better APR.

One thing to note is that the collection agency only knows what your medical care provider has told them. If the amount owed was in error, or, has been paid later by insurance, they wouldn't necessarily be aware of those facts.

Be sure to talk with your insurance provider, your medical provider and consult your bills before you start negotiating with a collection agency on any debt.

Can Medical Bills Affect Your Credit?

You’re wondering: Do medical bills affect your credit? The answer is yes, they do–if your bills go into collections.

The collection agency your service provider sends your debt to won’t send your information to the credit bureaus right away; there is a 180-day grace period before your medical debt can appear on your credit report. 

Keep in mind that your credit score could go down because your payment is past due and you’re in collections. You’ll have to check your report from the three major credit bureaus, Equifax, Experian, and TransUnion, as well as your FICO credit score, to stay on top of your personal finance. A good FICO score is 670 to 739, while an excellent one is 800 or above. 

Now that you know the answer to, “Can hospital bills affect your credit?” you may be worried about whether or not this could have a negative impact when you’re trying to buy a house or get a car loan.

So, do medical bills affect your credit when buying a house? Yes, unfortunately, they can.

If you’re in collections and have a lower credit score, lenders of any kind–whether it’s for a personal loan, mortgage, or car loan–are going to be more hesitant to give you money and could deny your request.

That’s why it’s important to make a payment arrangement to avoid collections. It's also good to make sure that you've explored all debt relief options with your healthcare provider. You may be surprised that you qualify for assistance or even complete debt forgiveness.

The Bottom Line

Do medical bills affect your credit? Of course they can. But that doesn’t mean there is no hope. 

Sometimes, medical debt is unavoidable. You have to put your health first, and that can end up causing financial issues.

However, you have options to get out of debt. And Possible Finance is here to help, with guides like:

  • 10 Tips to Help You Get Out of Debt
  • Should You Pay Off Debt or Save?
  • Tried, Tested and True Strategies to Pay Off Debt. 

Do your research and put in your due diligence when it comes to your medical bills, and you’ll be in a better position to feel in financial control the next time you visit your doctor.

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