Major Changes To How Medical Debt Is Reported On Credit Reports


The three main consumer credit reporting agencies (Experian, Equifax & TransUnion) have agreed to make changes to how medical debt is reported on consumers credit reports according to WSJ. The changes are as follows and will go into effect in July:

  • Medical debt that was paid after it was sent to collections will be removed from reports
  • Unpaid medical debts won’t get added to credit reports for a full year after being sent to collections
  • Removal of unpaid medical debt of less than $500 (won’t go into effect until first half of next year and could be increased from $500)

The changes come in response to the CFPB announcing it planned to hold credit reporting firms accountable for inaccurate reporting when it comes to medical debt. This isn’t the first time the CFPB has looked into this issue with a 2014 report showing that medical debt and non medical debt aren’t equivalent when it comes to determining a consumers credit worthiness. In 2015 changes were made that meant medical debt wasn’t added for 180 days.

It’s expected that these changes announced by the consumer reporting agencies will remove approximately 70% of medical debt currently reported on consumers reports. Most new scoring models discard or reduce the importance of medical debt as it’s not a great indicator of credit worthiness, so these changes shouldn’t come as a surprise.

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