Credit Report Relief Ahead On Medical Debt

Medical debt on your credit report is just as harmful as a delinquent credit card.

And yet, medical debt is unavoidable if you need treatment for a condition you cannot afford. 

It’s a common problem: Nearly one in five American households could not pay their medical costs up front and racked up debt, according to a U.S. Census Bureau survey released in 2021.

But there’s good news ahead for people who have minor medical bills that went to collection agencies and drag their credit scores down. The three major credit bureaus – Equifax, Experian and TransUnion – are making changes to lessen the impact. 

Here’s what ahead:

  • Starting Friday – July 1 – the credit bureaus will no longer include medical debt that is paid off on credit reports. Usually debts – even those paid off – will stay on credit reports for as long  as seven years.
  • Starting in 2023, unpaid medical debts in collections that are less than $500 will not appear in credit reports. 
  • As for any new medical debts above $500, they will not appear on credit reports until one year after the debt is reported to collection agencies. Currently, it’s six months. 

The changes are voluntary, not due to government regulation. Consumer advocates welcome the changes as long overdue, given the impacts of medical debt.

“If you have medical debt, it really piles up and makes you vulnerable to other types of debt,” said Maribeth Guarino, health care advocate with Oregon State Public Interest Research Group, or OSPIRG, a nonprofit advocacy group. “Having that reflected in your credit score, means that it's harder to find an apartment, to rent a car, to get a loan for your car or for your small business or for your house.”

The group has published a tip guide to help people address the problem.

An OSPIRG report that analyzed nearly 8,000 bankruptcy filings in Oregon found that at least 60% of them included medical debt. Fifteen percent of bankruptcy cases in that report had more than $10,000 in medical debt.

OSPIRG recommends Oregonians take the following steps

  • After July 1, check your credit report and ensure it no longer lists paid-off medical debts. Check your information from all three credit reporting bureaus, as the information can vary. 
  • You can receive a free copy of your credit report online at annualcreditreport.com. You also can call  1-877-322-8228. 
  • Check for medical debt in the “account information” and “collections” section of your report.
  • If you see any inaccurate information, you can dispute it directly with the credit reporting agency that lists it. To do that, you can go here: Experian; TransUnion and Equifax.

By federal law, credit bureaus must investigate disputes within 30 days and notify consumers within five days of its conclusion. If the credit bureau misses the deadline or fails to resolve the dispute, you can file a complaint with the Consumer Financial Protection Bureau. The complaint will go on a public database. Credit bureaus have 15 days to reply before it is published.

You can reach Ben Botkin at [email protected] or via Twitter @BenBotkin1.

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