By Americans are carrying a staggering $220 billion in medical debt, according to the American Hospital Association, with 14 million (6%) owing over $1,000 and 3 million (1%) in the hole for more than $10,000.
More than half (58%) of accounts in collections are for medical bills and medical debt is often cited as the primary factor in filing for bankruptcy.
Consumer advocates have pushed for medical bills to be removed from the credit reports used to tabulate credit scores, arguing that they’re not a good predictor of someone’s creditworthiness.
The issue has become a political hot potato: In January 2025, the Consumer Financial Protection Bureau finalized a rule that would end the inclusion of medical debt in credit reports and prohibit lenders from using medical information in their approval decisions.
But on July 15, 2025, a federal court in Texas vacated the CFPB regulation, concluding the decision was outside the agency’s jurisdiction.
Here’s what you need to know about how medical debt affects your credit score.
How does medical debt work?
Health care is expensive. Even if you have insurance, there are deductibles to meet and copays to cover. Your policy probably also has a coverage limit and may not cover certain treatments.
After your insurer pays its share, your health care provider will bill you for the balance. It might attempt to collect payment via letters, emails or phone calls. If you haven’t paid after several months, the debt can be sold to a medical collections agency.
Medical debt can come from a variety of sources, including:
- Hospital visits
- Surgeries
- Doctor and dentist appointments
- Prescriptions
- Ambulance companies
Can medical debt affect your credit score?
As long as your debt remains with your provider, it’s not reported to the three main credit bureaus, TransUnion, Equifax and Experian. After several months of non-payment, however, your provider may sell your debt to a collections agency, which will continue to pursue payment.
In April 2023, Experian, TransUnion and Equifax all stopped including medical debt under $500 in their credit reports. According to Equifax, the change eliminated nearly 70% of medical collection debt from reports.
Outstanding balances over $500, however, can still appear on your credit report for seven years, the same as any other kind of debt.
In 2024, the Consumer Financial Protection Bureau proposed prohibiting any medical debt from being included on credit reports and impacting credit scores. But in July 2025, a federal court vacated the CFPB regulation.
As a result, unpaid medical expenses over $500 can still appear on your credit report and, depending on the credit scoring models used, have a major impact on your score.
VantageScore removed all medical debt from its calculations in January 2023. But FICO, which is used by more than 90% of lenders, still factors medical bills into its scoring, although it gives them less weight.
FICO Scores and medical debt
FICO 9 and 10, the company’s latest scoring models, give less weight to unpaid medical collections than earlier versions, and paid accounts are disregarded.
Paid medical collections are still kept off credit reports, as are unpaid medical bills under $500.
There’s also a one-year waiting period before unpaid medical collections appear on credit reports, giving consumers time to address the debt.
Tips for tackling medical debt
If you’re swamped with medical bills, you have several options.
1. Negotiate your bill
“Providers are more than willing to settle on these things,” healthcare reform advocate Jeff Smedsrud told CNBC Select. “They’re willing to get paid something, rather than nothing. Review the charges together and try to negotiate a deal.“
Most hospitals have financial hardship policies, especially for patients who meet income requirements.
2. Set up a payment plan
Your provider may allow you to pay what you owe in monthly installments, Smedsrud said, possibly with no interest.
3. Look into nonprofits and government agencies
Organizations like Undue Medical Debt and the Patient Advocate Foundation work with individuals to pay off medical debts.
If you qualify for Medicaid, you may be able to have medical bills covered retroactively.
4. Consider debt consolidation or debt settlement
If you’re behind on a credit card you used to pay off a stiff medical bill, a debt consolidation loan could get you a lower interest rate and more time to settle the debt.
Debt settlement companies negotiate with collections agencies to get your balance reduced. You could pay as much as 25% of your balance for their services, so make sure enrolling makes financial sense.
Accredited Debt Relief works with medical debt and claims it can get clients debt-free in as little as two years.
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