The credit bureaus announced changes to the way medical collection data is reported. Here’s what you need to know:
- Paid medical collection debt will no longer be included on consumer credit reports. Implemented June 24, 2022.
- The time period before unpaid medical collection debt that will appear on a consumer’s report will be increased from 6 months to one year. Implemented June 24, 2022.
- NEW! Medical debt collection accounts under $500 will no longer be included on consumer credit reports. Effective March 30, 2023.
The credit bureaus expect that by mid-2023, unpaid medical debt collections less than $500 will no longer appear on credit reports. The FICO 9 scoring model will weigh medical bills in collections less heavily than other types of unpaid accounts. However, FICO 9 is not in widespread use by lenders as per Nerdwallet.
Previously, unpaid medical bills could be reported on credit reports, but there were some changes made that could affect how they are reported.
In 2020, the three major credit reporting agencies (Equifax, Experian, and TransUnion) agreed to change how medical debt is reported on credit reports. Under the agreement, the credit reporting agencies must wait 180 days before adding unpaid medical debt to a consumer’s credit report. This gives consumers time to work with their insurance company and healthcare providers to resolve any disputes or payment issues.
Additionally, once medical debt is paid by insurance or settled by the consumer, the credit reporting agencies are required to remove it from the consumer’s credit report. This is different from other types of debt, which can remain on a credit report for up to seven years.
It’s important to note that while these changes were made to help consumers, unpaid medical bills can still have a negative impact on credit scores. It’s always best to work with healthcare providers and insurance companies to address any billing issues as soon as possible to avoid negative credit consequences.