What Should You Do If You Have Medical Debt on Your Credit Report? (Part 1)

According to a recent report by the Consumer Financial Protection Bureau (CFPB), almost one-out-of-every-five consumers has information relating to their medical debt on a credit report. And while medical debt is the most common type of collection information on a consumer’s credit report, medical debts aren’t a good indicator of creditworthiness. Medical debt is usually for much smaller amounts than other types of debt. Seventy-five percent of medical collection debt is for amounts that are less than $490. And these debts often occur because many people get confused about how much they owe and how much their insurance covers. (These people are usually current for other bills.)

In light of data such as these, all three bureaus recently announced they are taking steps to change when and how they report medical debt.

In this and our next post, we will tackle how these changes impact you and what you need to know and do in light of these changes.

How the Credit Bureaus Are Changing Reporting of Medical Debt

First, as of July 1, 2022, the credit bureaus will give you a full year to resolve medical debt before including it on your credit report. Previously, you only had a year to do so.

Second, as of July, once you’ve paid a medical collection debt in full, it should no longer appear on your credit report.

And then, by mid-2023, the credit bureaus will not report medical debt in amounts that are less than $500.

Dealing with Medical Debt

If you have current medical debt, work out a payment plan or other arrangements with your creditor, and recognize you will have a year before any debt hits your report.

As you pay down the debt, keep records of all payments you’ve made; you want to know exactly who you paid and how much you gave them.

Your goal should be to see if you can get the remaining balance that you owe to be an amount less than $500. You have a year to do this, and if you can do it, the debt may never appear on your credit report.

In our next post, we’ll discuss what you should do if a medical debt is already on your credit report.

In the meantime, if there is any information on your credit report that shouldn’t be there, you can get your report corrected. You may even be entitled to damages if your credit report has wrong information. If you have any credit report issues, contact an attorney who specializes in representing clients like you—someone who can help you repair your record and obtain the compensation you deserve.

Read part 2 by clicking here!