Does medical debt affect your credit score?

Almost 92% of Americans have some form of health coverage¹. But that doesn’t mean they don’t have medical bills. Even if your health plan has a low deductible and minimal copayments, your insurance company will likely only pay a portion of your healthcare costs, leaving you to cover the rest. If you don’t pay your bills in a certain amount of time, they may end up at a medical debt collections agency. From there, they can grow into staggering medical debt.

According to the federal Consumer Financial Protection Bureau, 15 million consumers have a combined $49 billion in overdue medical bills in the U.S. credit reporting system. This is primarily due to high healthcare costs, billing errors, lack of medical insurance, and other reasons². Because of the outstanding amount, debt collectors contact individuals about medical bills more than any other type of debt.

The federal government has implemented measures to reduce medical debt for millions of U.S. families, such as passing the No Surprises Act. But many Americans still want to know if it impacts their credit scores. In this article, we’ll explain how medical debt affects your credit score and how you can avoid having medical debt impact your credit report.

In this blog post, you’ll learn:

• How unpaid medical debt can affect your credit score and how recent legislation can impact reporting practices.
• Whether you could be responsible for your spouse’s medical debt under your state’s laws.
• Practical steps to manage or avoid medical debt, including how a health reimbursement arrangement (HRA) can help cover out-of-pocket expenses.

How does medical debt affect your credit score?

Outstanding medical debt won’t appear on your credit score if it stays with your medical care provider. However, suppose your bill goes unpaid for at least 90 days. In that case, your health provider can send it to a medical collection agency.

Once an outstanding bill reaches a medical collection agency, the agency must wait one year to report unpaid medical debt to a credit bureau (such as TransUnion, Equifax, and Experian) instead of the previous six-month timeline.

This gives individuals more time to pay their bills, seek financial assistance, or work with their health insurance company before the debt negatively affects their credit score. Once the medical collection agency reports the debt, it’ll stay on their credit report for seven years.

In recent years, there have been changes to how medical debt impacts credit scores. TransUnion, Equifax, Experian, and other major credit bureaus began eliminating paid medical debts from credit reports in 2022. As of 2023, medical debt less than $500 won’t impact your credit score³.

Lastly, debt collectors and credit bureaus can no longer provide or report inaccurate medical debt.

“If medical bills go unpaid for an extended period, they can significantly tarnish one's credit, potentially sinking a good credit score by up to 100 points,” said Mark Pierce, Founder and CEO of Wyoming Trust & LLC Attorney. “Even though reforms now require credit scoring companies to remove paid medical debt from credit reports, it doesn't erase the damage instantly. Rehabilitation can require strategic efforts, such as ensuring bills are paid on time, keeping low balances on credit cards, and avoiding opening unnecessary credit accounts.”

Can you be held responsible for your spouse’s medical debt?

If you’re married, you may wonder if credit reporting agencies can hold you responsible for your spouse’s medical debt. Whether this is the case depends on where you live.

If you live in a community property state, the law considers you and your spouse equally responsible for any debt taken on during your marriage, including medical debt. Therefore, if your spouse has medical debt, creditors can contact you for repayment. This means it can impact your credit report even if the debt isn’t in your name.

The following states have community property laws⁴:

1. Arizona
2. California
3. Idaho
4. Louisiana
5. Nevada
6. New Mexico
7. Texas
8. Washington
9. Wisconsin

Additionally, Alaska allows individuals to enter a community property agreement. Florida, Kentucky, South Dakota, and Tennessee also let couples pool their assets into a community property or spousal trust.

Suppose your state doesn’t have a community property law. In that case, it’s considered a common law or equitable distribution state. These states don’t hold you responsible for your spouse’s medical debt unless you’re a cosigner on the amount.

However, many states have Doctrine of Necessaries laws⁵. These laws make spouses responsible for each other’s necessary costs, like medical expenses. But the details of these laws vary from state to state. So, spouses in locations with a Doctrine of Necessities law should research their state’s requirements to understand how it applies to them.

Lastly, if your spouse has passed away, you’re typically not responsible for paying their outstanding debts.

Is there any recent legislation that may impact how medical debt can affect your credit score?

The Fair and Accurate Credit Transactions Act of 2003 prohibited credit lenders from using medical debt information when considering an individual’s loan application. However, a federal regulatory exception allowed creditors to access and use the information.

In June 2024, the Biden Administration and the Consumer Financial Protection Bureau (CFPB) proposed a new rule to close the loophole and remove medical debt from the credit reporting system. The proposed rule would have amended the Fair and Accurate Credit Transactions Act. For example, it would have removed current and future medical bills from most consumer credit reports, improved privacy protections, increased loan approvals, and more⁶.

While finalized in January 2025 and set to take effect in March 2025, this new rule faced opposition. On July 11, 2025, a federal judge blocked the CFPB rule, stating it was an overreach and conflicted with the Fair Credit Reporting Act. While the CFPB can appeal this decision, it’s unlikely. Medical debt will continue to appear on credit reports⁷.

Fifteen states have new legislation prohibiting consumer credit bureaus from including medical debt on credit reports and scores⁸. But, debt collectors believe state legislators have also exceeded their authority with these laws. While reversing the CFPB medical debt rule doesn’t automatically impact state regulations, there could be changes in the future.

What to do if you can’t pay your medical bills

If you have medical bills now, you have several options to tackle them:

• Negotiate your itemized bill with your medical provider.
• Set up a payment plan or enroll in a financial assistance program with your healthcare provider.
  • If your medical provider is willing to split the bill into monthly payments, you can more easily manage the bill.
• Work with a financial advisor.
• See if you qualify for a 0% APR medical credit card.
• Review your medical bills for errors such as incorrect line items or double-billing.

You can also take the following steps to avoid major medical debt before it happens:

• Check what’s covered by your medical insurance policy before receiving care
• Ask your insurance company or provider for a cost estimate for planned healthcare.
• Request more affordable or generic versions of any expensive prescribed medications.
• Ask your employer to offer a health reimbursement arrangement (HRA).

How an HRA can help you pay your medical bills

An HRA is a customizable and formal health benefit employers can offer employees to help them pay for their medical expenses. With an HRA, your employer can reimburse you tax-free for qualified out-of-pocket costs, including individual health insurance premiums.

With an HRA, employers give their employees a monthly allowance for healthcare services. Once an employee provides proof of purchase for an eligible expense, employers will reimburse them up to a set allowance amount.

An HRA can help consumers avoid medical debt by covering an array of out-of-pocket costs that a group policy can’t. Unused HRA funds accumulate by rolling over from month to month until the end of the year. However, any unspent allowance stays with your employer if you leave their company.

Three types of HRAs can help you better manage your healthcare costs:

1. The qualified small employer HRA (QSEHRA). A QSEHRA is for businesses with fewer than 50 full-time equivalent employees (FTEs). The IRS sets maximum annual contribution limits; however, there are no minimum limits. Full-time W-2 employees are automatically eligible for the benefit. But you must have a health plan with minimum essential coverage (MEC) to participate.
2. The individual coverage HRA (ICHRA). An ICHRA is similar to the QSEHRA. But it’s for employers of all sizes and has no maximum contribution limits. You can opt in or out of an ICHRA based on affordability. If you opt in, you must have a qualifying form of individual health coverage to take advantage of the benefit.
3. The group coverage HRA (GCHRA), or integrated HRA. If your employer offers traditional group health insurance, they can boost it with a GCHRA. You can only participate in this HRA if you enroll in your employer’s group plan. But if you do, your employer can reimburse you for out-of-pocket expenses your policy doesn’t cover, like deductibles and coinsurance, with no maximum contribution limits. Insurance premiums are ineligible for reimbursement.

There are more than 200+ reimbursable expenses with an HRA. Eligible services and items include medical procedures, prescription drugs, mental health counseling, and over-the-counter medicine. Because of its flexibility, you’ll have better control over your medical bills and avoid hassle from debt collection agencies.

Conclusion

Medical debt can be difficult to stomach. But understanding how to manage it can help you stay in financial control. While the new federal rule keeps medical debt on your credit score for now, some states have taken steps to remedy this. In the meantime, strategies like negotiating bills and setting up payment plans can make a big difference for you and your family.

If your employer offers you an HRA, you’ll have a powerful tool to help you reduce the financial hardship of out-of-pocket healthcare expenses. By leveraging an HRA powered by PeopleKeep by Remodel Health, you can pay costly bills before they impact your credit score and wallet.

The information in this article isn't financial or medical advice. You should consult the relevant professionals for specific advice about your situation.

This post was originally published on July 24, 2024. It was last updated on August 1, 2025.

1. KFF Health System Tracker - Access and Coverage

2. CFPB Finds 15 Million Americans Have Medical Bills on Their Credit Reports

3. Paying Medical Debt Under $500

4. Community Property States

5. Doctrine of Necessaries

6. Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V)

7. CFPB Federal Ruling Reversal 2025

8. Does Your State Allow Medical Bills to Appear on Credit Reports?