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Does medical debt affect credit scores?

Mar 17, 2023

As medical treatments in the UK are mostly free on the NHS, many of us don’t build medical debts like our US neighbours can. But there are lots of treatments that aren’t covered, including many dental bills, private care, and cosmetic surgery.

If you want to borrow to fund medical debt, but you can’t afford to pay upfront and you’re worried about how that could affect your credit score, Loqbox can help explain.

Your credit scores are a numerical value that credit reference agencies (CRAs) use to summarise your credit report. You can use your three credit scores (you have three, not just one) as a way of seeing how creditworthy you appear to lenders when you apply for mortgages, loans or credit cards. There are three main CRAs in the UK: Experian, Equifax and TransUnion. 

Can medical debt affect your credit score?

Yes and no! Your credit score is affected when you use credit. So if you borrow money to pay for medical treatments and don’t pay it back or miss your payments, your credit score could go down. But it depends on the type of medical treatment that you undergo and how you decide to pay for it.

If you go to the doctor or the hospital for essential medical treatment in the UK, the chances are that it will be covered by the NHS.  So you probably won’t have to hand over any money, and your credit score won’t be affected.

Does cosmetic surgery or dental treatment financing affect your credit score?

If you’re having medical treatment that’s considered non-essential (like some cosmetic surgeries), you may have to cover the full payment — and it can be expensive.

Dental work is not always covered by the NHS, although sometimes it is subsidised. And that is assuming you have an NHS dentist, as most are now offering private dental treatment only. Dental treatment can be very expensive, as can cosmetic surgeries like rhinoplasty, liposuction, and breast enlargement or reduction.

But essentially, how you decide to pay for this sort of treatment and how you manage your payments can affect credit scores.

So what options do you have for dental treatment and cosmetic surgery financing and how does it leave your credit score looking?

Instalment payments

If you can’t afford to pay for your dental treatment upfront, some dentists will be able to offer you financial products to help you. These will differ from one dentist to another, but generally involve paying for your treatment in instalments, in no more than 12 months.

By limiting the repayment schedule to 12 months, dentists can offer this product without charging any interest. This means there’s no financial penalty for paying over time rather than upfront. If you can afford the monthly instalments, this can be a useful option.

The other great thing about taking a 0% interest payment plan is that the provider only has to do a soft credit search on you. That won’t affect your credit score! You can read more about soft vs hard credit checks here. Of course, if you don’t make your payments and your account is passed to a debt collector, that can hurt your credit score

Medical loans

If you can’t pay for your dental treatment upfront, and the monthly payments over 12 months are still too expensive, you may be able to get a loan from your treatment provider.

These work similarly to personal loans and will be offered with an interest rate dependent on your credit history. Generally, the higher your credit score the better your loan rates should be!

However, because finance loans mean you will be borrowing the money for more than 12 months, the lender will have to do a hard credit check on you. This can affect your credit score and make it go down temporarily. Also, if you don’t make your payments or default on your debt, this can really hurt your credit score! 

Personal loans

Personal loans can be a great way to get money upfront. But, unlike with secured loans which are held against collateral like your house or car, the interest rates can be quite high.
That means the amount that you ultimately pay back is quite a bit higher than what you originally borrowed.

Lenders of personal loans will do a hard credit check on you, which can make your credit score dip for a short time. But as long as you make all of your repayments on time and in full, it can actually help your credit score in the long run. Missing payments or defaulting on the debt will crash your score though, so be sure you can afford it first! Read more about personal loans and credit scores here.

Credit cards

Some people choose to put their dental or cosmetic surgery payments onto a credit card.
This way you transfer the cost of the medical treatment onto your card and pay off the debt with the card provider instead.

Although the provider does a hard credit check on you when you apply for a credit card, it can still be a great option with the right management.But it also comes with risk and can be an expensive way to borrow. 

Lots of credit card providers will offer an interest-free period when you take out a card with them. If you can pay off your medical treatment within that timescale, you won’t have to pay any premium on the debt. This works like the 0% interest financing that medical providers offer, but has the additional benefit of boosting your credit score.

But of course there is a risk to that reward. If you don’t keep up your repayments to your credit card and the interest free period elapses, you could find that your interest rates go through the roof. You could end up paying anything up to 50% of the initial cost on top! You can read more about how credit cards affect credit scores here.

Don’t miss a repayment

As with any credit agreement, missing payments can have a negative effect on your credit score. 

That could be through a loan or credit card that reports their payments directly to the credit reference agencies, or through debts getting out of hand and the medical bill leading to something more serious like a County Court Judgment (or an enforcement of debt by diligence, if you’re in Scotland).

Either way, missing payments really harm your credit score and can leave a mark on your credit reports for six years.

How can I grow my credit score?

Whether you want to be accepted for credit to pay for your medical treatment, you’re looking to get the best possible interest rates on a credit card or loan, or you’ve struggled with your repayments and it’s hurt your credit report — you might need to give your credit score a lift.

Great news. There’s a proven way to boost your credit score! Just get started with Loqbox Grow, which is available as part of a full Loqbox membership. We report your simple £2.50 a week membership payments to the top three CRAs in the UK, which helps your credit score to grow.

Improvements to your credit score are not guaranteed.

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