Most Medical Debt May Soon Vanish From Credit Reports

The three major credit bureaus announced a reprieve for those struggling with medical debt. Starting July 1, new and already-paid medical debt will be removed from consumer credit reports.

[Read: Best Balance Transfer Credit Cards.]

What Medical Debt Will Come Off Your Credit Report?

These types of medical collections won’t be on your credit report by this summer.

— Medical collection accounts that have been paid off.

— Medical collection accounts less than one year old.

In the first half of 2023, medical collection accounts of under $500 also will no longer be included in your credit report.

The credit bureaus — Equifax, Experian and TransUnion — note that these changes will remove almost 70% of consumer medical debt listed on credit reports.

[Read: Best Debt Consolidation Loans.]

Which Medical Bills Aren’t Covered?

These changes don’t eliminate medical debt from credit reports entirely. “When the changes take effect, unpaid medical debt that exceeds $500 and has been owed for more than a year may still appear on credit reports,” says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling.

The reporting change doesn’t apply to medical debt on a loan or credit card, either, says Freddie Huynh, vice president of data optimization for debt relief company Freedom Financial Network. “If you get a bill from a medical provider and put that amount on a credit card, it becomes credit card debt, not medical debt,” he says.

[Read: Best 0% APR Credit Cards.]

Should You Pay Small Medical Debt?

While certain types of medical debt will be removed from your credit report, you’re still responsible for repaying what you owe, says McClary. Creditors can still engage in collection activity, including contacting you for payment and suing you for payment of the balance.

“Just because a debt doesn’t appear on your credit report or impact your score doesn’t mean it’s not legally collectible,” he says.

What to Do if You Still Have Medical Debt

If you can, negotiate your bill or get help with payment before your account lands at a collection agency. McClary suggests contacting your insurance company to maximize your coverage benefit and working with your health care provider to identify a hardship program, which may offer reduced payment plans or some debt forgiveness.

However, if your medical debt is sent to a collection agency, try to mitigate the damage. “At the very least, if you cannot clear the whole balance in the first year, try to lower it enough to be below the $500 threshold,” says McClary.

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