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medical_billsWith the incorporation of the Affordable Care Act, the staggering costs of medical bills have been widely discussed in the past few years. What isn’t discussed as frequently however, is the impact that this debt could have on your credit score should they go unpaid. This is especially important to address when you consider the following statistics:

  1. According to the Wall Street Journal, 64 million Americans have medical collections on their credit report.
  2. The WSJ also states that over half of all debit-collection activity on consumers’ credit reports comes from medical bills.
  3. According to NerdWallet, medical bills are the leading reason that Americans file for bankruptcy.

How does medical debt impact my credit score?
So, how exactly do unpaid medical bills impact your credit, and what can you do to prevent this from occurring?

A key point to remember is that medical bills only affect your credit when they are sent to collections. Unlike financial institutions, doctors’ offices don’t have direct relationships with credit bureaus, so your payment history is not reported, just a lack of payment is. When unpaid, these bills will go to a collector, and will negatively impact your credit score.

Currently, medical collections are not weighed differently from other types of collection activity, and they can take up to seven years to drop off your credit report, even if you have paid the collector. For more information on what a credit score is and how it’s calculated, click here. 

How can I remove medical debt from my credit report?
If the debt reported is accurate, unfortunately there is not much that you can do to remove it from your credit report. It is important to continue to establish good payment habits on your other debts, so your credit score is not impacted further.

If the debt reported is inaccurate, there are a few steps you can take:

  1. Gather any documentation you have substantiating that the payment has been made (payment records, receipts, etc.)
  2. Send written notice to the specific bureau or bureaus which have reported your medical debt and include your documentation.
  3. Since the Fair Credit Reporting Act requires bureaus to investigate disputes, they must follow up with your claim. Remember to follow up with the bureaus until you see that the reporting error has been removed.

The best way to prevent medical bills from negatively impacting your credit is to pay your bills on time, and if you can’t, try and make arrangements that are more agreeable BEFORE the bill is sent to collections. It is also important to follow up with your medical insurance provider to make certain there are no misunderstandings that the bill has been paid in full. Due to the complex nature of insurance plans, sometimes consumers have bills sent to collections that they assumed their insurance carrier covered.

How is the impact of medical debt changing with the onset of FICO 9?
As you may have heard, recently FICO, the most widely-used credit score, revised its scoring model so the impact of medical collections on a credit report weighs less than other collections. The reason is because unlike other types of debts, many consumers don’t willingly choose to enter into these debts.  Medical bills are often unplanned and yield a very high amount of payment due in a much shorter time. In addition to decreasing the weight medical debt has on a score, FICO 9 also removes collection activity once the debt has been settled. Once in place, the revised score is predicted to raise credit scores impacted by medical debt an average of 25 points. For more information on how to improve your credit score, click here. 

However, don’t be quick to assume this will immediately boost your score. FICO is an independent company, and it is not required that lenders implement the new model; in fact, some haven’t even implemented recently revised models preceding FICO 9.  Again, the best way to ensure your credit report is in good standing is to pay, or make arrangements to pay, these bills before they move to collections.

Are you struggling with medical bills? Mariner Finance can help. We can work with you to find loan options that break your medical bills into smaller, more affordable monthly payments so they don’t go to collections. Call your local branch today to see if we may be able to help you!

This material was prepared for general distribution. Although all blog posts are intended to be accurate, the information and third-party links provided in the Mariner Finance’s blog are intended for general knowledge and educational purposes only without any warranties, implied or express, of any kind. The posts do not constitute investment, financial or other advice. Authors may or may not be licensed financial professionals; for specific advice, seek the input of a licensed and trained financial expert. Mariner Finance’s blog entries may also be viewed at www.pioneercredit.net and www.personalfinancecompany.com.

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†We offer personal loans starting at $1,000 with a maximum up to $25,000, depending on your state of residence. Loans between $1,500 and $15,000 may be funded online. Loans less than $1,500 or greater than $15,000 are funded through our branch network.

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, under our customer identification program, we must ask for your name, street address, mailing address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

*The process uses a “soft” credit inquiry to determine whether a loan offer is available, which does not impact your credit score. If you continue with the application process online and accept a loan offer, or are referred to a branch and continue your application there, we will pull your credit report and credit score again using a “hard” credit inquiry. This “hard” credit inquiry may impact your credit score.


Mariner Finance, LLC, NMLS No. 166564 (www.nmlsconsumeraccess.com)
8211 Town Center Drive, Nottingham, MD 21236. Telephone Number 877-310-2373.

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