Medical Bills Drag Down Credit Scores

At some point a lot of of us discover that we owe a medical bill for something that we thought was paid long ago.  Maybe we owe money, maybe it was a billing error. Nevertheless, medical debt can have a seriously negative impact on a credit score. That’s why it’s really important to check your credit report regularly. You can do it for free through

The Consumer Financial Protection Bureau (CFPB) found that we’re “overly penalized for medical debt that goes into collections.”  Once this shows up on your credit report it can affect your score by a least 10 percent. If your credit is already shaky, your score may drop as much as 22 percent and that could cost you tens of thousands of dollars when you borrow money to buy a home or use credit.

Your credit score is based on information in your credit report compiled by credit reporting agencies, or credit bureaus. These scores play a role in your financial life because most lenders decide to grant credit and set interest rates based on them.

Every time you make a late payment, it’s likely to be noted on your credit report and that decreases your credit score.  Lenders will take more caution and charge higher interest rates to those who have a history of late or missed payments. 

The Federal Reserve Board reports that over half of all collections on credit reports involve medical bills. Most medical debt goes directly to collection agencies. And in some instances consumers may not even be aware of a debt that has been sent to collections or that it is on their credit record. A collection account generally can stay on a report for up to seven years.

The CFPB took up the issues after it received many complaints from consumers. It found many credit scoring models don’t distinguish between medical and non-medical debt in collections and called for change.

CFPB Director Richard Cordray said, “Getting sick or injured can put all sorts of burdens on a family, including unexpected medical costs. Those costs should not be compounded by overly penalizing a consumer’s credit score.” 






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Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.