Common situations
Medical Collections on Your Credit Report
Why medical collections are different
Medical debt is treated differently than other types of debt for several reasons:
- People often do not choose to incur medical debt - You do not shop around in an emergency. Insurance disputes can leave you with bills you did not expect.
- Medical billing is notoriously confusing - Insurance, providers, and patients can be in a three-way disagreement about who owes what.
- Medical collections do not predict default risk well - Studies have shown that medical collections do not predict future default the way other collections do.
These factors led to specific rules for how medical debt is reported and scored.
Recent changes (2022-2023)
The credit bureaus and the major scoring model providers made significant changes to how medical debt is treated.
Paid medical collections must be removed
As of July 2022, paid medical collections are no longer reported on credit reports. If you paid a medical collection, it should not be on your report. If it is, dispute it.
One-year delay before reporting
Medical collections cannot be reported until they have been unpaid for at least one year. This gives you time to deal with insurance issues and billing disputes before the debt impacts your credit.
$500 minimum threshold
As of April 2023, medical collections under $500 are not reported on credit reports at all. If you have medical collections under $500 still showing, they should not be there.
These changes apply to all three credit bureaus.
How medical collections affect your score
Different scoring models treat medical collections differently.
FICO 8 (most commonly used)
FICO 8 treats medical collections the same as any other collection. A medical collection hurts your score similarly to a credit card collection.
FICO 9
FICO 9 is more lenient on medical collections. Specifically:
- Paid medical collections are ignored entirely
- Unpaid medical collections are weighted less heavily than other collections
FICO 9 has been available since 2014 but adoption has been slow. Most lenders still use FICO 8.
FICO 10 and 10T
The newest FICO models continue the trend of treating medical collections more leniently.
VantageScore 3.0 and 4.0
VantageScore models also treat medical collections more leniently than other collections. Medical collections are weighted less, and paid medical collections are weighted very lightly or ignored.
More on different scoring models
What this means practically
For accounts being scored under FICO 8 (which is what most lenders pull), medical collections still affect your score whether paid or unpaid. Settling them does not significantly improve your FICO 8 score because the account remains on your report.
For accounts being scored under FICO 9 or VantageScore, paid medical collections have minimal or no impact.
This creates strategic considerations:
- If you are applying for credit with a lender that uses FICO 8, paying a medical collection may not help your immediate goal
- Pay-for-delete (where the collector agrees to remove the account from your report) is more valuable for medical collections under FICO 8 because the account itself is the problem
- For lenders using FICO 9, simply paying the medical collection accomplishes the goal even without removal
Common issues with medical collections
Insurance not applied
Often a "medical collection" is actually a billing dispute where insurance was supposed to pay but did not, or paid the wrong amount. Before doing anything else with a medical collection:
- Call your insurance company and verify the claim was processed correctly
- Call the original provider and verify the amount they sent to collections matches what insurance did not cover
- Check whether the bill was sent to the wrong address before going to collections
Original provider mistakes
Hospitals and doctor's offices regularly send people to collections who never received a final bill. This happens because of address changes, billing system errors, or confusion about insurance.
If a medical collection appears for an amount you never received a bill for, you may be able to negotiate with the original provider to have the collection withdrawn.
Surprise billing
The federal No Surprises Act (effective 2022) provides protections against unexpected medical bills from out-of-network providers in emergencies and certain other situations. If your medical collection stems from a surprise bill, you may have legal protections beyond standard collection rules.
Collections from medical credit cards
CareCredit, Synchrony Bank medical financing, and similar products are technically credit card debt, not medical debt, even though they were used to pay medical bills. They are not protected by the medical debt rules and are scored as regular credit card collections.
What to do about medical collections
Step 1: Verify the bill is correct
Contact the original provider, not the collector. Get an itemized bill. Compare to what your insurance paid. Verify the amount sent to collections is accurate.
Step 2: Check the account is reportable
If the medical collection is under $500, less than one year old, or already paid, it should not be on your credit report. Dispute it.
Step 3: Negotiate with the original provider
Many original providers will work with you on payment plans or settlements before sending bills to collections. Even after the bill goes to collections, the original provider sometimes has the ability to recall the debt if you pay them directly.
Step 4: If negotiating with the collector, get pay-for-delete in writing
If you are going to pay a medical collection, try to negotiate pay-for-delete (where the collector agrees to remove the account from your credit report after payment). Get this agreement in writing before paying.
Step 5: Consider FICO 9 strategies
If you have multiple medical collections and your goal is improving your credit for an upcoming application, identify whether the lender uses FICO 9. Some mortgage products and many credit unions use FICO 9. For FICO 9, simply paying the medical collections accomplishes the goal.