Medical Debt and Your Credit Report

Medical debt is the most common kind of collection account in the United States, and it is treated differently from other debt in several ways.

Why it is treated differently

Medical bills end up in collections for reasons that have little to do with whether someone can pay: insurance disputes, billing errors, a claim sent to the wrong payer, a bill mailed to an old address, a hospital and an insurer arguing for months while the balance quietly ages.

Regulators and the credit bureaus have both acknowledged that medical collections predict repayment risk less well than other collections.

The changes that have been made

Several changes took effect in 2022 and 2023 through agreements involving the three nationwide bureaus:

• Paid medical collections are removed from credit reports entirely
• A one-year waiting period applies before an unpaid medical collection can appear, giving insurance and billing disputes time to resolve
• Medical collections under $500 are not reported

Separately, federal rulemaking aimed at removing medical debt from consumer credit reports more broadly has been proposed, challenged, and litigated. The status of that has shifted more than once.

Newer scoring models also weigh medical collections less heavily than other collections. Older models used in some mortgage underwriting do not make that distinction.

What to check on your own report

1. Is it under $500? It should not be reported at all.
2. Is it paid? A paid medical collection should not be on your report.
3. Has it been a year since the debt went to collections? If not, it is too early to report.
4. Is the amount right? Medical billing errors are extremely common — duplicate charges, services not received, the wrong procedure code.
5. Was insurance billed? A bill that should have gone to an insurer and went to collections instead is a billing error, not a debt you failed to pay.
6. Is it listed more than once? Hospital, physician group, and anesthesiology often bill separately for one visit. That is legitimate. The same bill from two collectors is not.

Before disputing, get the itemized bill

You have the right to an itemized statement from the provider. Ask for it. A surprising share of medical collection disputes are resolved at this step, because the itemization shows a charge that was already paid, already covered, or for something that did not happen.

Financial assistance

Nonprofit hospitals are generally required to have written financial assistance policies, and many people who qualify never apply because they do not know the policy exists. Some of these policies apply retroactively to bills already in collections. It is worth asking the provider's billing department directly.

The order of operations

1. Get the itemized bill from the provider
2. Confirm what insurance was billed and what it paid
3. Ask the provider about financial assistance or a payment plan
4. If the amount or the responsibility is wrong, dispute with the provider and the collector
5. Dispute the credit report entry with the bureau, with the documentation attached

Doing step 5 first, without the paperwork, is the version that usually comes back verified.