Medical Debt Changes to Credit Reporting

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According to the Consumer Financial Protection Bureau, in June 2021 nearly $88 billion in medical debt appeared on roughly 43 million credit reports. If you are one of the millions of Americans that struggle with medical debt and the negative impact it can have on your credit score, the three credit bureaus have announced a major change that could offer some relief.

Medical Debt Updates

Effective July 1, 2022, medical debt that has been paid off will no longer be included on credit reports from Equifax, Experian and TransUnion – even if it has been on your report for several years.

Additionally, the three credit bureaus have increased the amount of time before medical debt in collections appears on your credit reports from six months to one year. If you’re in the process of negotiating or paying a medical debt, this can give you extra time to work with providers or collectors to find a payment solution.

Beginning in the first half of 2023, the three credit reporting agencies will also no longer include medical debt in collections under $500 on credit reports.

The credit bureaus have stated their new policies will eliminate roughly 70% of medical debt from credit reports, but it is still imperative for consumers to confirm for themselves that their paid medical debt has been removed. 

Steps You Can Take

You can request a free copy of your credit report online from annualcreditreport.com or by calling 1.877.322.8228. These are official channels authorized by the government. You can get a free report from each of the three credit bureaus once per year.

Once you have your report – U.S. PRIG, a healthcare advocacy group, recommends looking specifically for medical debt you already paid in full. If you see debt that you’ve already paid off, you can dispute it directly with the credit reporting firm.

Federal law requires the credit bureaus to investigate disputes within 30 days and notify you within five days once the investigation is done. If your dispute is denied or the error is not removed from your report, you can file a complaint with the Consumer Financial Protection Bureau.

Interested in learning more about Credit Reports?

Credit plays a huge role in both your personal and financial life. There are many different factors that make up a credit score and we understand that they can be difficult to navigate. To help, we developed our Virtual Credit Sessions, where Michigan First financial service experts offer a deep dive into credit scores and credit reporting while sharing tips and tricks to effectively manage your credit and ensure you put your best foot forward when you need to borrow. Interested in learning more about Credit Reporting? Watch our latest seminar today.

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