In today's healthcare landscape, even a brief hospital visit can leave behind a mountain of bills. And with insurance not always covering everything — or in some cases, anything — many Americans are left grappling with medical debts they never expected to face. In 2024, about 20 million Americans, or nearly 1 in 12 adults, owed money for medical debt, according to the . 

The impact of this type of debt can be more than financial, though. Medical debt often hits during a time of personal crisis — after an accident, illness or surgery — leaving people emotionally overwhelmed and financially vulnerable. And when those bills go unpaid, the stress can compound as collections calls start and credit scores begin to slip. For many, this debt is not the result of overspending or poor budgeting, but simply the price of getting necessary care.

Luckily, recently updated credit reporting rules and a range of relief programs are starting to ease the burden for many patients. But it's still important to understand exactly how medical debt affects your credit and what steps you can take to protect yourself.

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How medical debt impacts your credit

Medical debt used to be one of the quickest ways to damage your credit score. Even small unpaid bills could end up in collections and drag down your credit for years. But relatively recent changes from the three major credit bureaus — Experian, TransUnion and Equifax — have shifted how this type of debt is handled. Here's what changed:

• Paid medical collections no longer appear on credit reports. If you settle or pay off your medical debt, , even after it goes to collections.
• There's now a one-year waiting period. Medical bills sent to collections for 12 months, giving you time to resolve them or work out a payment plan.
  Smaller debts are excluded. Medical collections under $500 no longer appear on credit reports at all.

These reforms mean that unpaid medical bills might not damage your credit as quickly or as severely as they once did. Still, if a large medical balance goes unresolved for too long, it can eventually show up on your report and lower your credit score, especially if you don't take action during that one-year grace period.

It's also important to know that while medical debt is handled differently than credit card or loan debt, lenders don't necessarily make that distinction. A collection is a collection, and any mark on your credit report can impact your ability to get approved for a loan, rent an apartment or even land certain jobs.

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What you can do about your medical debt

If you're struggling with medical debt, you have options. Taking action sooner rather than later can help you avoid collections and limit the potential damage to your credit score. Here are some strategies worth considering:

Review and negotiate your bills

Start by carefully reviewing every bill for errors or duplicate charges. Medical billing mistakes are surprisingly common. If something doesn't look right, call the provider or hospital's billing department and ask for an itemized statement.

Once you verify the charges, see if the provider will negotiate. Many are willing to offer discounts for prompt payment, set up interest-free payment plans or even reduce what you owe if you demonstrate financial hardship.

Apply for financial assistance

Nonprofit hospitals are legally required to offer financial assistance programs to eligible patients. If you're low-income or facing financial hardship, you may qualify for partial or full forgiveness, even if the bill has already gone to collections. Ask your provider's billing office for an application.

Consider a debt relief program

If your medical debt is substantial or you're juggling multiple types of unsecured debt, a debt relief program, like debt settlement, may be worth exploring. Debt settlement programs work by negotiating with your creditors to settle your debts for less than the full amount owed. There are also debt relief programs that consolidate your debts into a single monthly payment, which can make them easier to manage.

Keep in mind, however, that while debt settlement can help resolve medical collections, it may come with risks, such as fees, tax implications and temporary credit score drops, so it's important to work with a reputable provider and understand the trade-offs.

Monitor your credit

Your credit report should reflect any paid or settled medical debts accurately, but that may not always be the case. So, be sure to check your credit report regularly to ensure no incorrect medical collections are listed. If you spot an error, dispute it with the credit bureau directly.

The bottom line

Medical debt can feel uniquely unfair, as it often comes out of nowhere and hits when you're least prepared. But while it has the potential to hurt your credit, changes in how this debt is reported now offer more breathing room. You still need to act quickly and proactively, but there's a path forward even when the bills seem insurmountable.

From negotiating with providers to seeking financial aid or working with a debt relief program, there are ways to tackle medical debt without wrecking your financial future. So, know your options and use the time you have before those bills end up on your credit report to tackle the issue before it compounds.