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New Rules 2023 Medical Debt I Credit Reporting

Medical debts, unlike any other debts/section on the credit report, aren’t incurred voluntarily but
have been estimated by the Consumer Financial Protection Bureau (CFPB) to contribute to
approximately 43 million Americans with bad credit reports across the United States. When
compared to assets you voluntarily purchased, you can’t just wake up and feel; oh, I want to be
sick today, then go on to the hospital to get treatment knowing fully well that you do not have the
money to pay this debt.

Yet, these medical debts can stand in your way and prevent you from accessing funds needed to
execute vital projects in your life like; getting an apartment, paying your child’s college fees, and
so on. This article contains the latest changes made to credit report listing of medical debts that’ll
bring a smile to your face.

New Rules on Credit Report Listing of Medical Debts

Here’s the good news; a recent change effected as of July 1, 2022, has brought relief to millions
of Americans suffering from the effects of these debts.

  • Medical collection debts that have been paid as of July 1 will now be removed from such credit reports by the 3 major credit agencies (Experian, Equifax, and TransUnion).
  • Together with the first rule, these credit bureaus are set to stop reporting medical collection debts under $500 in the first half of this year 2023.
  • The period before an unaddressed medical collection debt would appear on your credit report has been increased from 6 months to 1 year.

Medical Debt – How it Impacts Your Creditworthiness

Medical Debts refer to any outstanding healthcare bills you owe and are unable to meet up with
payment by the due date given by such services. You might have done everything you think is
required of you, even probably chose in-network hospitals and medical practitioners but still end
up with an unwanted medical debt.

Yes, this might be because you do not have the money, but more often, some sit on your credit
report unnoticed. A survey by nationally representative consumer reports revealed that 24% out of
a population of 1000 consumers (adults) with medical bills over $500 weren’t aware the debt was

The impact of these debts on your credit score isn’t a positive one as it drastically drags down
your FICO score, especially when it becomes past due. Medical Debt has been estimated by to be the largest source of debt in collections, even more than a collection of auto
loans, credit cards, and utilities combined.

How Important is Medical Debt to the FICO Score Formula?

A recent article we released on important Tips to Improve Credit Scores, reveals that payment
history– amidst other major factors that make up the FICO score– is the most important. Timely
payment of debts, together with bankruptcies, liens, etc. constitute this history, and together they
make up 35% of your total FICO score.

The amount owed(debts) section, will boldly reveal this debt when calculating the FICO score and
inevitably drag down your score because this section also contributes to 30% of your total FICO

Benefits That Accompany These New Rules For Consumers

  • An Extended Payment Window: The new changes to how medical debts are listed on credit reports by the 3 major credit bureaus (Experian, Equifax, and TransUnion) means that; you now have more time to address the bill.

Before these changes were made, credit bureaus usually wait for 180 days before linking unpaid
medical debts to your credit report. But now, you have a grace period of a year, allowing both
insurers and providers to resolve the debts before it’s too late.

  • Removal of Unpaid Medical Collection Debts: In time past, medical collection debts would sit on file for an ample period of seven years, not considering if the debt was paid or not. This in one way or the other still affected credit reports until recently. Experian, Equifax, and TransUnion will now unlist – from their credit reports– debts that have been addressed/paid as of July 1, 2022.

These 3 bureaus in a statement made in March 2022, revealed that these new rules remove an
estimated 70% of medical collection debt tradelines from credit reports of Americans nationwide.

  • Waivers on Medical Debts Not Up To $500: This Change is proposed to be effected from the first half of the year 2023. Any medical collection debt below $500 will not be included in your credit reports. According to a document released by the Consumer Financial Protection Bureau (CFPB), most medical collection debts listed on credit reports are below $500.

The Kaiser Family Foundation also noted that two-thirds of medical debts result from short-term
or one-time healthcare bills incurred due to acute healthcare needs.

  • Huge Relief To Certain Groups of Americans: Black Americans, those of Hispanic census tracts, and also residents of lower income are likely to have medical collection tradelines than white Americans and residents of higher income.
  • Overall Improvement on Your Credit Score: All of these changes eventually add up to brighten your credit report as they have the potential to increase your credit score by a reasonable amount of points– an average of 22 or more points typically.

What We Advise You Do

We at are committed to helping you achieve your goal of a
healthy credit score, so kindly consider these 2 cents as golden.

  • Request a new credit report from your credit bureau. You can get a free weekly report from here.
  • Check for prior medical debt collections on your new report and confirm that they have been removed. Particularly be on the lookout for sections designated as Account Information or Collections.
  • Immediately dispute these medical collection debts separately with each of the credit bureaus. If unsure of how to go about this, check our recent article on how to remove Inaccuracies from your credit report.