Your Guide to Getting a Medical Loan with Bad Credit

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With the cost of health care on the rise, it’s little surprise that many Americans struggle with their medical bills. In fact, even having employer-sponsored health insurance is no guarantee that you won’t have problems paying your medical bills. About 40% of people with employer coverage have had some type of trouble paying for their health care in the last year, according to the Kaiser Family Foundation.

If you’re having trouble paying an unexpected medical cost and you don’t have great credit, you might be worried about your options. Credit cards and payday lenders can be very expensive, and letting the medical account go to collections can severely damage your credit score. 

Getting medical loans when you have bad credit can be tricky, though. The good news is that it’s not impossible. Here’s what you need to know about dealing with debt stemming from hefty medical bills.

Do You Actually Need a Medical Loan?

Before you decide to apply for a medical loan, though, consider calling the health care provider to see if you can come to an arrangement. Start by asking for an itemized bill and reviewing it for accuracy. You might be able to get the bill reduced if there are errors.

Next, see if you can set up a payment plan. It can be daunting to receive a large bill, but the reality is that many providers, especially hospitals, offer interest-free payment plans for 12 to 24 months. 

Some health care providers will also negotiate a discount if you can make a reduced lump-sum payment. Find out your options before you get a medical loan.

If you can’t come to an arrangement with your provider, that’s when you should consider getting a medical loan to help you better manage your costs.

In most cases, a medical loan is a personal loan that you earmark to pay off your medical expenses. Depending on your situation, there are even medical loans for borrowers with bad credit, though you’re likely to pay a higher interest rate for those loans. 

If you can show that you’re using the loan to pay off medical bills, you might be able to negotiate better terms, even with questionable credit.

Common uses for medical loans

  • Dental and orthodontics work, including x-rays, implants, root canals, braces, and other services.
  • Physical therapy needed when recovering from an injury or illness.
  • Infertility treatments, including in vitro fertilization, surgery, drugs, and even surrogacy.
  • Cosmetic surgery, including liposuction, Botox, breast augmentation, and facelifts.
  • Weight loss procedures that include various gastric bypass and banding surgeries.
  • Hair loss replacement efforts like grafting, transplants, and drugs.
  • Hospital and other provider bills resulting after you’ve met requirements for co-pays and deductibles.
  • Paying off current bills through consolidation, getting all of what you owe under one loan.

Basically, anything that can be considered a medical or health care procedure can be paid off using a medical loan.

Your interest rate depends on your credit score and other factors. You might see rates ranging from somewhat less than 6% annual percentage rate (APR) up to more than 20% APR, but some lenders may charge even more—especially if you’re carrying a bad credit score. 

How Much Can You Borrow?

In general, how much you borrow depends on the lender you choose and the term length, as well as your income and the lender’s credit requirements. Some personal loans, which can be used to pay off medical debt, have minimum requirements of $1,000 or $2,500, and the upper limit is often $35,000 or $40,000, although some lenders might be willing to let you borrow more. 

Take a look at your financial situation and what you can afford, and get several loan quotes. As you apply, you might need to have certain paperwork. For example, One Main Financial requires that you provide your Social Security number and other proof of identity, as well as information about your income and other debts. 

Look for a medical loan that suits your needs and that offers manageable monthly payments.

Each lender has its own requirements related to credit score. It’s possible to get medical loans with bad credit, but you might not get access to the best terms if you have a credit score below 660. 

When Will You Get Your Money?

Depending on the lender, you can get your money in as few as one to three business days. However, some lenders might take longer, up to two weeks. Many online marketplaces and lenders have fully automated application processes that can streamline your ability to get approved for your loan and have the money directly deposited into your bank account. For example, with SoFi, an online lender, you might get your money in a matter of days, and LightStream claims it will get the money to you as soon as the same day. 

Where to Find Medical Loans

There are plenty of lenders available to provide you with medical loans. 

Start by going to a local bank or your credit union to see what’s available. If you’re a customer in good standing, you might be able to get a loan with very competitive rates, depending on your credit score. If your bills are relatively small—less than $5,000—you might be able to get a “signature loan” (an unsecured personal loan) without too much trouble.

You can also look online for personal loans. There are a number of websites that aggregate personal lenders. You can see several quotes by filling out one loan application. 

Online loan marketplaces may even be able to suggest medical loans for people with bad credit if some of the main lenders won’t qualify you. However, APRs can be as high as 26.99%.

  • 401(k) loan: You can lend yourself some money from your retirement plan. However, there are limits on repayment, and if you leave your job before the loan is paid off, the entire amount becomes due. Plus, you miss out on potential market gains for your retirement savings during the time the money has been withdrawn.
  • Home equity: If you have built up equity in your home, you might be able to tap into it to pay your bills. However, if you can’t qualify for medical loans for bad credit, you might also have trouble getting approval for a home equity loan. Plus, you’re putting your home on the line as collateral. If repayment doesn’t work out, you could lose your house.

If you qualify for a Health Savings Account (HSA), it can make sense to establish one and start contributing to it to plan ahead for medical costs. This money remains yours if you change employers, rolls over from year to year, and comes with tax advantages. 

Key Takeaways

Large medical bills can seem overwhelming at first. However, you do have options. Start seeking repayment options with your health care provider before a delinquent account goes to collections, and if that doesn’t work, see what types of borrowing avenues you have. You might be surprised to discover that you can even get medical loans when you have bad credit. 

Article Sources

  1. Kaiser Family Foundation/Los Angeles Times. "New KFF/Los Angeles Times Survey Highlights the Financial Challenges Facing People with Employer Health Benefits," Accessed Sept. 11, 2019.


  2. USAA. "Personal Loan FAQ," Accessed Sept. 26, 2019.


  3. SoFi. "Personal Loans," Accessed Sept. 26, 2019.


  4. OneMain Financial. "What Documents Do You Need to Apply for a Personal Loan?," Accessed Sept. 24, 2019.


  5. LightStream. "Apply in Minutes. Have Funds in Your Account as Soon as Today," Accessed Sept. 21, 2019.


  6. SoFi. "FAQs by Category, Personal Loans," Accessed Sept. 21, 2109.


  7. IRS.gov. "3. Under What Circumstances Can a Loan Be Taken From a Qualified Plan?" Accessed Sept. 26, 2019.


  8. IRS.gov. "401(k) Plan Overview," Accessed Sept. 26, 2019.