How Medical Debit Impacts Credit Scores Is Changing

    ORLANDO, Fla. – Come July 1, 2022, paid medical collection debt won’t be used for credit scores and unpaid medical debt won’t appear for a full year, according to the three main credit reporting agencies (NCRAs) – Equifax, Experian and TransUnion.

    That means the companies are removing nearly 70% of medical collection debt tradelines from their consumer credit reports – a change that helps support consumers faced with unexpected medical bills. The move follows months of industry research. According to the Kaiser Family Foundation, two out of three medical debts result from a one-time or short-term expense from an acute medical need.

    For some consumers with medical debt problems, it means a higher credit score. That will not only qualify some of them for homebuying, it will likely save them money on all credit products, including the amount they pay on credit cards.

    Effective July 1, 2022, paid medical collection debt won’t be included on consumer credit reports – and the time period before unpaid medical collection debt appears on a consumer’s report will increase from six months to one year.

    The credit reporting agencies said the extra time is to give “consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.”

    Starting in the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.