Do Medical Bills Affect Your Credit?


Quick Answer

Like other debts, unpaid medical bills can affect a consumer's credit rating and appear on his credit report. However, as of 2015, Fair Isaac Corporation, Equifax, Experian and Transunion have made changes to their systems that may decrease the financial impact of medical debts on consumers' credit ratings.

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Full Answer

In 2014, after reviewing 5 million credit reports, the Consumer Financial Protection Bureau determined that the presence of medical bills in collections was not a good indicator of creditworthiness. The CFPB noted that while approximately 43 million Americans have medical debt on their credit reports almost one-third of those people have otherwise flawless credit. FICO agreed that medical debt should be treated differently, and in August 2014, FICO released a new version of its credit-scoring formula, which gives less weight to unpaid medical bills than other unpaid debts and does not include medical collections that the consumer paid. However, this may not have a beneficial impact on a consumer's credit score because lenders are not required to use FICO's newest formula.

In March 2015, as a result of a deal made with New York State Attorney General Eric Schneiderman, Equifax, Experian and Transunion announced that they would change the way they reported medical debts. The changes include a six-month waiting period before adding unpaid medical bills to a credit report, erasing previously reported medical debts that the consumer paid, and investigating consumer complaints of inaccurate reporting. The agencies expect it to take approximately six months to roll out these new procedures.

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