Higher Credit Scores: New Medical Debt Rules Could Give a Boost

Any medical debt under $500 has been removed from Americans' credit reports by major credit bureaus.

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Some Americans have already seen their credit scores rise.

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There's good news for Americans struggling with medical debt. The three major credit bureaus -- Equifax, Experian and TransUnion -- declared that all medical debt under $500 would be removed from credit reports.

Medical debt plagues a wide swath of America -- more than 100 million people and 41% of all adults owe money for health care, per the Kaiser Family Foundation. For years, this debt has been included in credit reports, pushing credit scores down.

In March 2022, the Consumer Finance Protection Bureau published a lengthy report questioning the "outsized role" of medical debt on credit reports, and the industry responded. A few months later, the credit bureaus announced they would remove all medical debt that has been paid from credit reports (previously it would stay for seven years). 

Along with those two big changes, the credit agencies now give Americans one full year to address outstanding medical bills before they're added to their credit reports. 

Learn what you need to know about the changes for medical debt reporting, including how you can confirm that your medical debts have been removed from your credit reports.

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How does unpaid medical debt now impact credit reports?

Unpaid medical debt is usually handed over to a collection agency after 60 to 120 days of delinquency. From there, the main credit bureaus will now extend a year-long grace period for consumers to address the debt -- either by paying in full or negotiating with their insurance or the collections agency -- before adding it to a credit report as a collections account.

Prior to July 1, 2022, the old grace period was about half a year, or 180 days, and all collections would stay on consumer credit reports for seven years. The new rule changes mean that paid medical collections debts will be removed from credit scores, though unpaid medical collections debt over $500 will still remain on your credit record. 

When was paid medical collection debt removed from credit reports? 

As of July 1, 2022, paid medical collection debt should no longer be included on consumer credit reports for the three credit reporting agencies. The United States Public Interest Research Group encourages Americans with prior medical debt collections to check their reports to confirm that paid debts have been removed. 

On April 11, 2023, Equifax, Experian and TransUnion announced that any medical collection debt below $500 will no longer be included on credit reports, regardless of whether the debt has been paid. Most medical collection debt on credit reports is under $500, according to the CFPB (PDF).

How can I confirm my medical debt has been removed from my credit report?

The three major credit bureaus have been offering free weekly online credit reports ever since the start of the COVID-19 pandemic. You can get your own credit report weekly at AnnualCreditReport.com. (Before the bureaus started offering free weekly reports, Americans were allowed one free credit report per year.)

Once you've downloaded your reports, carefully look through each to find any notices of collections for paid medical debt. Specifically look for sections labeled "Collections" or "Account Information."

If you do find medical debt still cluttering up your credit score, you'll need to dispute any items with each of the credit bureaus separately. Follow the links below to each bureau's page for filing disputes.

How will these changes impact my credit score?

Having a debt go to collections can drop your credit score significantly -- and it gets worse the longer it hasn't been paid. For instance, your credit score is likely to drop more if a bill has gone unpaid for 150 days versus 30 days.

Once a collection has been removed from your reports, you could see a positive change in your credit scores. The impact on your credit score will depend on how many collection accounts you have. If your only collections account is removed from your report, your score could rise as much as 150 points, according to credit repair company Credit Glory.

For more financial information, here are the best credit monitoring services. Also, here's how you can save money at the gas pump and while shopping.