Medical Debt: 2022 Update

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by Joe Mahlow •  Updated on Feb. 22, 2023

Medical Debt: 2022 Update
A caption for the above image.


This summer, the three major credit bureaus, TransUnion, Experian, and Equifax, are making some big changes to their medical collections policy by announcing that they will delete 70% of medical collections from consumer credit reports by July 1, 2022. The credit bureaus will also stop adding new, unpaid medical collections to credit reports until those debts are a year old. And in 2023, medical collections under $500 will no longer show up on consumer credit reports.


Millions of Americans struggle with medical debt and the negative impact they can have on credit scores. Unfortunately, medical collections can make it difficult (and sometimes impossible) for people to access new financing when they need it. Medical collections on credit reports might even make it harder for some people to land a job and this is so wrong. 

Medical Debt UnFun Facts:

  • One in three American adults has medical debt.
  • Most medical collections on credit reports are for debts under $500.
  • 58% of all third-party collections on credit reports were for medical debt in 2021.
  • Two-thirds of medical debts stem from a short-term or one-time medical expense (not a long-term pattern of bad credit behaviors).


So why are the credit bureaus doing us a solid by removing 70% of medical collections?


When negative information shows up on your credit report (i.e., collection accounts, late payments, etc.), lenders may feel that doing business with you is a bigger risk. Even a medical collection on your credit report could damage your credit score and make it harder for you to qualify for financing.


People with paid medical collections on their credit reports are less likely to make late payments than other people with the same credit score. Per the CFPB, these consumers should have credit scores that are around 20 points higher on average. Therefore, it seems that medical collections may not be as accurate at predicting future defaults compared with other types of collection accounts. Billing errors are also common with medical bills, and patients are the ones who pay the price when mistakes happen. 


The credit bureaus have been under pressure for years to update credit reporting practices. And the COVID-19 pandemic has only made medical debt issues more pressing for many people. As a result, all three credit bureaus have announced medical credit reporting changes to “help people across the United States focus on their financial and personal wellbeing.”


Even though these major changes to how medical debt will be included on consumer credit reports start soon, it’s still important to work hard and keep your credit in the best shape possible across all factors.


Comment Section

Sheu Abdulazeez Sep 10,2022 11:09 pm
Great content Joe. Keep up the good work. I love your company services.