The Impact of Medical Debt on Credit Scores

Medical debt is becoming harder to deal with than ever thought before.  This is because credit score bureaus have started treating all debt equally.  This means that those with medical debt end up with low credit scores as medical debt unexpectedly builds up fast and is often higher than many other debts.

When people see medical debt on credit scoring reports, they may assume that one is in a lot of debt due to money mismanagement, but this is always not the case as diseases and medical emergencies come unexpectedly.  However, those with medical debt continue to suffer with low credit scores as they lose money in high interest charges when they want to buy anything that requires credit checked before purchase.

Impact of Medical Debt

Treating All Debt Equally Equals Unfair Credit Scoring

Treating all debt such as student loan, credit card and medical debt equally is unfair as people get in debt for different reasons with medical debt being the most unexpected of all.  The impact of medical debt is enormous considering that medical costs have gone up even for minor illnesses.

The impact of medical debt on lowering credit scores is unreasonable as studies have proven that those with medical debt pay it off no matter how huge it is.  It would be fair to score medical debt differently to other debts as it will stop those with this kind of debt being treated as un-credit worthy consumers and stop the penalties they have to pay on their debts because of being considered as a credit risk.  It will also reduce the interest rates charged on utilities, mortgages and credit cards for those with lower credit scores.

How to Repair Credit Scores if Paying Medical Debt

Reducing the impact of medical debt on your credit score requires you to stick to a few steps to help you bring that score up again.  Building a credit score is not easy and cannot be done overnight, however, those with medical debt can get good credit scores after six months to one year or more by being consistent in following the following steps:

  • Come up with a payment plan that is sustainable.  One mistake that those suffering the impact of medical debt do is set very high goals on repayments that they cannot sustain.  This may be a good idea as it may help people pay off the debt faster.  However, this plan will not work if you cannot follow through with it on a consistent basis until the final debt payment is made.  You should remember that you may be out of work for a long time due to the disease that brought about the medical debt.  So choose a payment plan that you can afford to make while at the same time being able to meet your basic daily needs until you are able to go back to work.  Your credit score will improve over time if you keep reducing the medical debt by making regular monthly payments.  If you happen to get a large sum of money, reduce the impact of medical debt by paying off the whole debt at once.
  • Keep all other debt down.  If possible, keep all other debt that you may have down if you want to stop your credit score plunging further down.  Don’t use credit cards and ensure that you make your student loan payments on time.  If you cannot afford to make payments on your student loan, defer the payments to another favorable time to avoid expensive charges.
  • Never miss a payment.  To reduce the impact of medical debt, never miss a payment whether you are making the minimum or more on your debt.  This is because missing a payment or paying it late affects your credit score further and makes it more difficult to recover a good credit score.  If you find yourself struggling to pay the minimum amount required of you due to not being able to work, you need to set up a new payment plan that you can easily manage and consistently stick to.
  • Report successful payment of utilities.  If you are good at paying your utility bills, you can ask your landlord, water or electricity company to report how well you pay these bills to the credit score bureau as this will help build your score.
  • Often review your credit report. You need to review your credit report several times a year as it is common for medical institutions to make mistakes on your medical bills.  Dispute any mistakes you find and ensure that they are resolved.


To reduce the impact of medical debt calls for mitigation, especially ensuring that you make payments on time, every time.  Follow the steps given above and ensure that the unfair medical debt reporting does not set you back financially.