Your Credit Is at Risk from Unpaid Medical Bills—Here’s How to Safeguard It

Unpaid medical bills can damage your credit, making it harder to get loans and increasing your costs for things like interest and insurance. And while it may be surprising that consumer reporting agencies (CRAs) can use medical debt to assess your creditworthiness, a recent court case decided it was legal. That means you’ll need to plan to pay off your medical bills now, before they become an even bigger burden.

How Medical Bills Damage Your Credit

Medical debt can build up quickly as out-of-pocket health care costs rise. These costs have increased by nearly 50% between 2010 and 2022. A 2024 KFF analysis estimated that 20 million people owe a collective $220 billion in medical debt. 

If you don’t pay, providers can sell the debt to third-party collectors, damaging your credit for seven years. This can raise your interest rates, limit loan options, and even increase insurance costs.

For a brief moment this year, it became illegal for medical debt to be included on your credit report, thanks to a rule issued by the Consumer Financial Protection Bureau (CFPB) in the final days of the Biden administration. But a court ruling in July reversed the rule, finding that the bureau had exceeded its authority. The CFPB itself, now led by long-time Trump loyalist Russell Vought, declined to support the rule in a motion filed to the court.

How to Protect Your Credit After a Medical Emergency

Policy changes to ease medical debt may take time. But there are steps you can take now to keep medical bills from hurting your credit.

What to Do After You Receive a Medical Bill

If you have health insurance, start by reviewing your explanation of benefits to confirm what your insurance covered and what you owe. If there’s a discrepancy, call your provider and insurer to clarify and correct any errors.

If any of your care was rendered at an in-network facility or ambulance by someone you didn’t know was out-of-network, you may also be able to dispute the charge as a surprise bill under the No Surprises Act.

If you don’t have health insurance, or if your coverage still leaves you with unmanageable out-of-pocket expenses, many providers will work with you to find a solution. Some may agree to negotiate the bill down to something more affordable, and others will allow you to pay the bill over time using a payment plan.

Paying a Large Medical Bill

You can use a flexible spending account (FSA) or health savings account (HSA) to help pay medical bills with tax-free money. While FSA funds expire each year, HSA funds can roll over and grow over time.

You might also qualify for help from medical charities. And if your care came from a nonprofit hospital, look up its financial assistance policy, which describes the circumstances under which you can be offered aid.

Bottom Line

Medical debt can add to the burden of high health care costs by damaging your credit, which can lead to higher interest rates and limit your borrowing options. You can ease the impact by using tax-free health accounts and negotiating with your providers.