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Does Healthcare Collections Affect Credit Score?

Healthcare has become expensive today and this increase in prices is only about to see a hike in coming years. For the same reason, patients are compelled to go towards medical debt as paying huge bills at a time is very difficult for middle-class people. But this debt has an adverse effect as well, and that leads to healthcare collections.

Healthcare collections is a process in which if you can’t pay the bill, hospitals will declare your due as a debt and you have to pay installments. Since this is a type of debt, it will impact your credit score. But how exactly does it affect your creditworthiness and how much? 

We are exploring these crucial answers in this guide. Read till the end to know what situation you might face when paying the bill in the form of debt.

What Are Healthcare Collections?

2 people signing a contract

Before diving further into credit impact, let’s see what healthcare collections are and what this process involves.

Suppose you are having a treatment of your loved one from a healthcare facility. After the complete therapy, you will receive a bill that lists all the equipment used and processes done on the patient. Each service is listed with its amount and for a total, you are handed over a $600 bill. What do you do if you don’t have such a big amount ready at hand?

Installments; to cater to worse economic situations, healthcare facilities offer an installment program. After signing a contract you will pay your bill in installments and thus you are free from paying such a big amount. But this process too has its cons.

When a hospital offers you an installment plan, your bill amount is classified as a debt and is shown in your credit history. Many of you might not want to associate your bill with your credit score. But this is how the system works. If you can’t pay the bill, you become a debtor. 

Want to reduce your bill amount?

So healthcare collections refers to the process done by a hospital by collecting bills in installments by declaring them as a debt. While hospitals are safe by doing this, your credit history will indicate a debt and that is how you will be seen as someone who owns a debt.

Impact On Credit Score

Since your loan-taking ability highly depends on your credit score, if a hospital bill is seen as a debt, it will negatively impact your credit score. Your history will show that you have taken on such a big debt. This might cause a huge hurdle when you take a loan for anything else. 

Even if you are able to pay a loan on time, due to your negative credit score, loan providers will hesitate to offer you a good interest rate. As a result, you might receive a not-good loan offer with non-favorable terms and high-interest rates.

This is how your medical bill directly impacts your credit score. Any type of debt means a low credit score and a low credit score means less possibility to receive a good loan. Since your credit score represents your creditworthiness. 

Consequences Of Medical Debt Affect On Credit Score

credit cards

Besides basic credit score and loan impacts, debts have more severe consequences. So here we are gonna list all these risks that you should keep in mind regarding medical debts.

High Borrowing Costs

As we discussed earlier, debts can make it difficult for you to secure a good loan. With a negative credit history, you will be lent loans with high-interest rates that increase the overall cost of borrowing. Hence healthcare collections can lead you to expensive loan terms.

Employment Risks

Many of you might not know this, but most of the time, employers hiring for a big post check the candidate’s credit history to analyze their reliability. This could somehow affect your ability to secure high-paying jobs and roles.

Rental Applications

Healthcare collections not only impact jobs but also housing. Landlords that rent you their houses carefully analyze your credit score to check if you are able to pay rent on time. Low credit scores may lead to decreased house renting options and high deposit requirements.

Legal Issues

In severe cases, debt collection agencies that are hired by healthcare facilities use aggressive tactics to collect bills. As we said this is only for those rare cases where installments are not paid. Also, this doesn’t impact your credit score but it does throw you into legal troubles like court judgments. Here knowing your boundaries and patient rights is essential.

How To Improve Your Credit Score?


You have pretty much understood healthcare collections and their all impact on credit scores. But you should also know how you can win your score back after adverse effects. Here are some strategies that help you improve your credit history even after taking the loan, so follow these techniques:

Review Your Credit Reports

Keeping all your records is essential to track your credit history. Generate reports from major credit bureaus like Equifax, Experian, and TransUnion. Thoroughly read and review your reports. Ensure all information is accurately mentioned along with your medical debt.

Set Up Payment Plan

Since you must have to pay the hospital bill in installments, it is a good idea to contact a healthcare provider and discuss your debt in detail. Negotiate terms where you can. Make a manageable payment plan. Consistent payments positively impact your credit score.

Pay On Time

Not only healthcare bills, pay other bills on time as well. Any due may contribute to a bad credit score. You can also set reminders to make your payments on time. It will help you stay punctual on payments.

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    Decrease Credit Card Balance

    If your credit card balance is more than your credit limit, it can negatively impact your score. Reduce your card balance below 30% of your credit limit.

    Expand Your Credit Mix

    Keep a varied credit mix. This means buy:

    • Credit cards
    • Different installment loans
    • Mortgages

    This mix will help you keep your credit score balanced. If you don’t have this mix, open new credit accounts.

    Avoid Debt

    Since you are already in a healthcare debt, avoid taking more debts before paying this one. It will not only impact your credit score but also make it difficult for you to pay off these debts. 

    Keep Old Accounts Open

    If you have old credit accounts, keep them open. Closing it might have an adverse effect on your credit history. So it is a good idea to keep your account open, active, and well-managed.

    Check For Errors

    Last but not least, regularly check your reports and credit scores. Identify any error quickly before it hurts your credit score.

    Healthcare Financial Resilience

    As you can see, though healthcare collections do have a negative impact on your credit score, it isn’t permanent. With the help of the strategies we mentioned, maintain a good credit score after acquiring debts. 

    During this world of economic uncertainty it becomes crucial to take debt, but knowing some measures can get you out of the situation. So analyze the situation better and make an informed decision about your health and credit score as well.