Medical collections can lower your credit score, but the damage works differently than other types of debt

Yes, medical collections hurt your credit score. When a hospital, doctor's office, or medical provider sends your unpaid bill to a collection agency, that collection account appears on your credit report and causes your score to drop. The size of the drop depends on your current score, how old the collection is, and what else is on your report.

The important difference: medical collections often damage your score less than other collections do. Credit scoring models like FICO 9 and newer versions treat medical debt more leniently than credit card debt or personal loans. But older scoring models and some lenders still count medical collections the same way they count any other collection, so the impact is not may provide to be smaller.

Key Takeaways

  • Medical collections appear on your credit report when a provider or hospital sends your unpaid bill to a collection agency, and they lower your score when ready.
  • Newer credit scoring models (FICO 9 and later) weight medical collections less heavily than credit card or loan collections, but older models treat them the same.
  • A collection account stays on your report for seven years from the date the original debt went unpaid, even if you pay it later.
  • Paying off a medical collection does not remove it from your report, but it may reduce the damage and stops the debt from growing.
  • Some medical collections may be removed if the debt was paid by insurance or if the provider made an error in reporting.

How medical debt becomes a collection

Medical collections do not happen overnight. A bill typically goes to a collection agency only after you have missed payments for several months. Here is the usual timeline: you receive a bill from the provider, you do not pay it, the provider sends you reminder notices, and then—usually after 90 to 180 days of non-payment—they sell or assign the debt to a third-party collection agency.

Once the collection agency takes over, they report the account to the three major credit bureaus: Equifax, Experian, and TransUnion. That report is what shows up on your credit report and begins to lower your score. The collection agency may also contact you by phone, mail, or email to try to collect the debt.

Medical debt is different from other debts because it often involves insurance. If your insurance company was supposed to pay the bill but did not, or if there was a billing error, the collection may not be your fault. This matters because you may have grounds to dispute the collection or have it removed.

The difference between medical and other collections

Credit scoring models have started to treat medical collections differently because they recognize that medical debt is often unexpected and involuntary. FICO 9, released in 2020, and FICO 10.5, released in 2023, both reduce the weight of medical collections compared to other collections. VantageScore 3.0 and later versions also treat medical debt more favorably.

However, not all lenders use the newest scoring models. Many still use FICO 8 or older versions, which treat medical collections exactly like credit card collections or loan collections. Banks, credit card companies, and mortgage lenders may use different models, so the impact on your ability to borrow can vary depending on who you are dealing with.

The practical result: a medical collection will hurt your score, but it may hurt it less than a credit card collection of the same size would. The exact damage depends on which scoring model the lender uses and how recent the collection is.

How long medical collections stay on your report

Medical collections remain on your credit report for seven years from the date the original bill first went unpaid—not from the date the collection agency took over. This seven-year clock is set by federal law and applies to all types of collections, medical or otherwise.

After seven years, the collection account should automatically fall off your report. However, it may still be legally collectable in some states, meaning the collection agency could still try to sue you. The seven-year reporting period and the statute of limitations for suing are two different things, and they vary by state.

Paying off a medical collection does not erase it from your report. The account will still show on your credit report for the full seven years, but it will be marked as "paid" or "settled." A paid collection does less damage to your score than an unpaid one, but it is still visible to lenders.

What happens to your score when a collection is reported

The damage to your credit score happens in two stages. First, when the original bill goes unpaid and the provider reports it as delinquent, your score drops. Second, when the debt moves to a collection agency and is reported to the credit bureaus, your score drops again—usually more significantly.

The size of the drop depends on your starting score. If your score is already low, a collection may lower it by 50 to 100 points. If your score is high (say, 750 or above), the same collection might lower it by 100 to 150 points because you had more points to lose. Collections also have more impact when they are recent; a collection from six months ago hurts more than one from five years ago.

Your score can begin to recover over time, even if you do not pay the collection. As the collection gets older, its impact weakens. After two or three years, the damage is usually much less severe. After seven years, when the collection falls off your report entirely, your score may improve noticeably.

Paying off a medical collection

Paying a medical collection stops it from growing and stops the collection agency from pursuing you, but it does not remove the account from your credit report. The collection will still be visible for the full seven years, though it will be marked as paid.

Before you pay, consider whether paying now is worth the cost. If the collection is already several years old and close to falling off your report, paying it may not improve your score much. If the collection is recent and you are planning to explore for a mortgage or other major loan soon, paying it may help your score enough to matter.

If you do decide to pay, get a written agreement from the collection agency before you send money. Ask them to confirm in writing that they will mark the account as paid and will not pursue further collection efforts. Some collection agencies will also agree to remove the collection from your report entirely in exchange for payment—this is called a "pay to delete" agreement—though this is less common and not always legal depending on your state.

Disputing a medical collection

You have the right to dispute a medical collection if you believe it is inaccurate or if it was reported in error. Common reasons to dispute include: the bill was already paid by your insurance, the amount is wrong, the debt is not yours, or the provider made a billing error.

To dispute, send a written letter to the collection agency and to the credit bureau that is reporting the collection. Include copies (not originals) of any documents that support your claim—an insurance explanation of benefits, a receipt, a letter from the provider, or anything else that proves the collection is wrong. The collection agency and credit bureau must investigate your dispute within 30 days.

If the collection agency cannot verify that the debt is accurate, they must remove it from your report. If your insurance was supposed to pay the bill, contact your insurance company and ask them to send proof of payment directly to the collection agency. This often resolves the dispute without you having to take further action.

Medical collections and getting credit in the future

A medical collection makes it harder to borrow, but it does not make it impossible. Credit card companies, auto lenders, and mortgage lenders all look at your full credit history, not just one collection. If the collection is old, if you have paid other debts on time since then, and if you have a good reason for the medical debt, you may still be able to borrow.

Some lenders are more forgiving of medical collections than others. Credit unions, for example, often consider the full context of your situation. Mortgage lenders typically require that medical collections be paid before they will approve a loan, but credit card companies may approve you even with an unpaid collection if your other credit is good.

The best strategy is to focus on building good credit habits going forward: pay your bills on time, keep credit card balances low, and do not open too many new accounts at once. As the collection gets older and as you build positive credit history, its impact on your ability to borrow will shrink.

Frequently Asked Questions

Can I get a medical collection removed from my credit report before seven years?

Yes, if the collection is inaccurate or was reported in error. You can dispute it with the credit bureau and the collection agency. If the debt was paid by insurance or if the provider made a mistake, you may be able to have it removed. Some collection agencies will also remove a collection in exchange for payment (a "pay to delete" agreement), though this is not always legal depending on your state.

Does paying off a medical collection improve my credit score?

Paying off a medical collection stops it from growing and stops collection calls, but it does not remove the account from your report. Your score may improve slightly because the account will be marked as paid rather than unpaid, but the improvement is usually small. Newer credit scoring models give more credit for paid collections than older models do.

Will a medical collection prevent me from getting a mortgage?

Most mortgage lenders require that medical collections be paid before they will approve a loan. However, if the collection is old and you have good credit otherwise, some lenders may overlook it. The best approach is to pay the collection before you explore for a mortgage, or to ask the lender directly what their policy is.

What is the difference between a medical collection and a regular debt collection?

Newer credit scoring models treat medical collections less harshly than other collections because they recognize that medical debt is often unexpected. However, older scoring models and some lenders treat them the same way. The practical impact depends on which scoring model the lender uses.

Can I be sued for a medical collection?

Yes, a collection agency can sue you for a medical debt, but only within the statute of limitations for your state. The statute of limitations varies by state and usually ranges from three to six years from the date the debt first went unpaid. Even after the statute of limitations expires, the collection will stay on your credit report for seven years.