Does Medical Debt Affect Your Credit Score?

Medical bills can stack up fast, especially when unexpected health issues hit. If you're wondering if medical debt affects your credit score, you're asking the right question. About 41% of adults carry some form of healthcare debt, and many worry about what this means for their financial future. The good news? Certain protections exist for consumers dealing with medical debt. But understanding exactly how medical debt credit report rules work requires knowing both industry practices and state-level regulations.

How Medical Debt Shows Up on Your Credit Report

Medical debt doesn't immediately appear on your credit report. When you receive care, the provider bills you directly first. If you don't pay within a certain timeframe, the debt may go to collections. The three major credit bureaus (Equifax, Experian, and TransUnion) follow voluntary guidelines that provide some protection.

You have a 365-day grace period before unpaid medical debt appears on your report. This full year gives you time to pay, negotiate, or resolve billing issues. Debts under $500 are excluded from credit reports, which removed nearly 70% of medical collection accounts from consumer files when this change took effect in 2023. Once you pay off a medical collection, it's removed from your report entirely.

What Happened with the Federal Medical Debt Rule

In January 2025, the Consumer Financial Protection Bureau (CFPB) finalized a rule that would have removed an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. The rule aimed to ban medical debt from appearing on credit reports used by lenders.

However, on July 11, 2025, a federal court in Texas vacated this regulation. The court found that the rule exceeded the CFPB's statutory authority under the Fair Credit Reporting Act. As a result, medical debt over $500 can still appear on your medical debt credit report and potentially impact your score.

Despite this federal setback, 15 states have enacted their own legislation prohibiting credit bureaus from including medical debt on reports. These states include California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington. If you live in one of these states, you may have stronger protections.

How Medical Debt Impacts Your Credit Score

The impact on your score depends on which scoring model lenders use. FICO scores power more than 90% of lending decisions, and newer models like FICO 9 and 10 give less weight to medical collections compared to other types of debt. Paid medical collections are disregarded entirely in these newer models.

VantageScore took a different approach. As of 2023, VantageScore removed all medical debt from its calculations entirely. Medical collections don't affect VantageScore at all, whether paid or unpaid. The challenge is that many lenders still use older FICO models that treat medical debt more harshly. If you have unpaid medical debt over $500 that's been in collections for more than 365 days, it can lower your credit score significantly.

Why Medical Debt Differs from Other Debt

Medical debt is fundamentally different because it's often unexpected and unavoidable. You don't choose to get sick or injured, and costs can be unpredictable even with insurance.

Research supports treating medical debt differently. CFPB studies show that medical debt has little predictive value for credit underwriting. People whose scores dropped due to medical debt were just as likely to repay loans as those with higher scores. Medical billing errors are also common, and nearly 6% of medical collections have been disputed at some point.

How to Protect Your Credit from Medical Debt

Taking action early makes a big difference. Before bills go to collections, review every bill carefully for errors and duplicate charges. Contact the provider's billing department to negotiate payment plans. Ask about financial assistance programs or charity care, and double-check that your insurance processed claims correctly.

If bills have already reached collections, request debt validation from the collection agency. Negotiate a pay-for-delete agreement if possible. Focus on paying off debts under $500 first, since they won't appear on your report anyway. Use the 365-day grace period strategically to resolve issues before they impact your score.

The Connection Between Health Benefits and Financial Wellness

More than a third of adults with healthcare debt say it negatively affected their credit score. Having adequate health insurance is one of the most effective ways to prevent medical debt. Strong health benefits for employees give you access to plans that fit your specific needs, better financial protection against unexpected costs, and tools to compare coverage options.

When employers offer comprehensive benefits, employees gain more control over their health decisions. This means fewer surprise bills, less financial stress, and greater peace of mind. For small and mid-sized businesses, offering personalized benefits doesn't have to be complicated or expensive.

How We Can Help

At Venteur, we understand that preventing medical debt starts with having the right health insurance. Our Individual Coverage Health Reimbursement Arrangement (ICHRA) platform helps employers offer better benefits while saving money. With a fully compliant employer experience that integrates with your payroll provider, you can provide flexible, personalized health benefits that work for every employee.

Our personalized plan-buying experience helps your team find plans that fit their needs and budget. Enterprise companies have saved millions using our platform, while startups can get their high-growth teams covered quickly. Better health coverage protects both your employees and your bottom line.