Why your medical debt could be wiped from your credit report soon

Equifax credit score report.

If your credit score has been impacted by medical debt, you could soon be getting some relief.

Starting July 1, Equifax, Experian, and TransUnion -- the nation’s biggest credit reporting agencies -- will stop including paid medical collection debt in your credit scoring.

Currently, the debt can stick to your report for up to seven years. According to the Kaiser Family Foundation, two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need.

According to a recent report, research shows $88 billion medical debt on consumer credit records as of June 2021. The total amount of medical debt in collections in the U.S. is likely higher, since not all medical debts in collections are furnished to consumer reporting companies. Most medical debt collection tradelines on consumer credit reports are under $500, although many people with medical debt have multiple medical collection tradelines.

Here’s the fine print:

Effective July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports. In addition, the time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file. In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.

According to data, Black and Hispanic people, and young adults and low-income individuals of all races and ethnicities, are more likely to have medical debt than the national average. As a result, these populations may be more heavily impacted by outdated credit models that overestimate the predictiveness of medical debt. Older adults and veterans are also heavily impacted by medical debt.


About the Author:

Ken Haddad is the digital content and audience manager for WDIV / ClickOnDetroit.com. He also authors the Morning Report Newsletter and various other newsletters. He's been with WDIV since 2013. He enjoys suffering through Lions games on Sundays in the fall.