Does Medical Debt Hurt My Credit?

Medical Debt vs. Medical Bill Effects On Credit

Medical bills that you're actively paying on, which remain current, have no impact on your credit reports or score because medical providers don't report to the credit bureaus. However, once you begin to miss payments, the bill has a chance of being sent to a collection agency, which will then be reported as medical debt.

Medical debt includes money that is owed to healthcare providers like hospitals, doctors, clinics, labs, or other medical facilities, after you get care. Unpaid medical bills that are sent to collections could harm your credit score. Medical providers can use various debt collection tools, including making phone calls, sending notices via mail or email, or hiring a collection agency, to get paid. In some states, your wages can be garnished to collect debts.

The three major credit bureaus – Experian, TransUnion, and Equifax – have an additional layer of protection against medical debt harming your credit score. They each provide a one-year waiting period before a medical debt shows up on your credit reports, giving you additional time to make payment arrangements or pay the bill.

Additionally, medical debt with a balance of under $500 doesn’t appear on U.S. consumer credit reports, per a 2023 policy change.

Debts that show up in collections on your credit reports remain there for seven years. After you pay or settle a medical debt, it will be removed from your report.

Does Medical Debt Hurt My Credit?

Medical debt that appears on your credit report can lower your score.

In 2024, the Consumer Financial Protection Bureau (CFPB) proposed a rule that would remove an estimated $49 billion in medical bills from the credit reports of 15 million Americans. However, months after the CFPB finalized the rule, a federal judge in Texas reserved it in July 2025. The judge ruled the bureau isn’t permitted to remove debt from credit reports, according to the Fair Credit Reporting Act, which protects information collected by consumer reporting agencies.

Typically, paid and unpaid medical debt under $500 will not impact your credit. However, larger unpaid medical debt that ends up in collections can affect your credit and will stay on your report for years.

The two most common credit scoring models in the U.S. are FICO and VantageScore. In 2022, VantageScore eliminated medical debt collection data from its consumer credit score calculations. FICO, which is used by a majority of lenders, does factor medical debt into its scoring. FICO Scores 9 and 10 only count unpaid medical debts and give these debts less weight in the overall credit calculation.

While medical debt has a smaller impact on your credit score than other types, it could still raise concerns for lenders.

Getting An Auto Loan With Medical Debt

If you’re saddled with medical debt, it can affect your ability to get approved for a car loan in two key ways. Not only can medical debt lower your credit score, it can also inflate your debt-to-income (DTI) ratio – both of which lenders use to determine your creditworthiness.

Borrowers with a credit score of around 670 and lower will likely need to work with different lenders than those who have a higher credit score. Traditional (or direct) lenders like banks, credit unions, and some online lenders generally only work with borrowers who have good credit.

If you have a poor credit score, you likely need to work with a special financing dealership that's equipped to handle tough credit situations. Having medical debt reported on your credit can be a sign of habitual bad credit and can be a red flag to many lenders.

Habitual bad credit is signaled by things like missing or late payments on your credit reports or having other large negative marks on your credit reports, such as bankruptcy or past repossession. These signs differ from those of situational bad credit, such as job loss or unexpected medical expenses, and lenders can tell the difference.

How to Clean Up Your Credit to Secure an Auto Loan

If you have habitual bad credit or medical debt that's impacting your ability to get an auto loan, you still have options. Perhaps your best chance at beginning to repair your credit is to start paying all your bills, medical or otherwise, on time.

Payment history is the biggest factor in making up your FICO credit score, 35% of it. It's also a good idea to get a copy of your credit reports and score so that you can see what lenders are seeing.

If you find that there are mistakes or accounts you don't recognize, you have the right to dispute errors with the credit bureaus. In most cases, you can do this online. If you find that your credit reports are in need of more fixing than you have time to tackle, you can also try to repair your credit reports through a third-party credit repair company.

Credit repair can take time, and if you need a car right now, here are ways to offset the limitations of a low score:

• You can make a larger down payment on the vehicle to appease lender concerns.
• Consider shopping around for lenders – some lenders are more lenient with medical debt, so you can compare rate quotes without several hard credit inquiries.
• Using a cosigner, usually a close family member or friend with good credit, can potentially help you get approved for a loan. Keep in mind that your cosigner is on the hook if you miss a payment, especially if it goes to collections.

The Bottom Line

Medical debt can be a heavy burden. However, recent policy changes have relaxed reporting rules, giving consumers more time to negotiate with collectors, pay down balances, and tap into financial aid or debt-relief programs.

If you're dealing with bad credit due to medical bills or anything else, don't despair. There are lenders available to work with you through special finance dealerships.

Auto Credit Express has built a nationwide network of dealerships that are signed up with supreme lenders ready to help borrowers with less than perfect credit. To get started hassle-free, fill out our fast, free, auto loan request form, and we'll get to work locating a dealer in your area.