How to make sure your credit reports don’t include paid medical debt

Medical debt, even when it is paid off, remained on credit reports for up to seven years. That's about to change. Here's how to make sure paid medical debt doesn't lower your credit score.

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When you aren’t feeling well and need medical care, you focus on getting the treatment you need. But in addition to focusing on their physical health, many Americans also worry about how much that health care will cost them, and how they’ll pay the ensuing medical bills. 

About 1 in 5 Americans had a medical bill they could not pay at the time they received the care. Those bills often end up in debt collections, and then show up on a person’s credit report. In 2021, medical debts in collection were found on 43 million credit reports. Medical debt, even when it is paid off, can remain on a credit report for up to seven years. Those negative marks on your credit report can mean that you might not be approved for a loan, or a credit card, and can even impact hiring decisions by potential employers. 

What’s new?

The three major credit bureaus (Equifax, Experian and TransUnion) have pledged to change how they will treat the reporting of medical debt. Starting July 1, 2022, the agencies say paid medical debt will no longer appear on credit reports and beginning in 2023, owed medical debt of less than $500 will not be included in credit reports either. (Note: this is voluntary on the part of the credit bureaus — not a governmental mandate.)

What should you do now?

Because this policy could significantly improve your credit score, we encourage you to check out your credit reports and make sure any paid medical debt is no longer listed there after July 1. 

How do I check my credit report? 

  1. Obtain a free copy of your credit report by requesting it online from annualcreditreport.com or calling 1-877-322-8228. These are the official channels authorized by the government for requesting free reports. You can get a free report from each of the three credit bureaus once a year. Be aware: Other sites offer a credit report, but they may ask for a fee, show you ads, or may be a scam site trying to steal your personal information

  1. Look closely at your report to make sure the information is correct. Look specifically for medical debt that you have already paid in full that is mistakenly still there. Medical debt will generally appear in one of two places. 

  • Check the section where the credit reporting agency “flags” any new debt.
  • Check the “Account Information” or “Collections” section of the report.

You should not see any paid medical debt on your report. If you do, go to step 3.

  1. Use the dispute process offered by credit reporting agencies to report any paid medical debt or other errors. You can use these links:

Federal law requires credit bureaus to investigate any disputes within 30 days (or 45 days if you got your report through the free annual report service). The credit bureau then must notify you within five days of completing its investigation. 

What if the credit bureau doesn’t remove from my report the medical debt I’ve paid off, even after I disputed it?

If the credit bureau does not respond within a timely manner or denies your dispute, you can submit a complaint to the Consumer Financial Protection Bureau (CFPB). Companies have 15 days to respond to you before your complaint is published on the public database that is used by the CFPB to track consumer problems.

Are there any other new policies I should know about relating to medical debt?

The credit bureaus also promised that any new medical debt will not be included in credit reports until a year after the debt is given over to collection agencies (rather than the current six months). 

Should I check my credit report at all three of the major bureaus?

If you think you have lingering paid-off medical debt, or if you find a paid medical debt on one report, you should check your reports with all three bureaus. Your information isn’t necessarily the same on all three of your credit reports.  

For more information on how to read and understand your credit report:

Understanding your credit report history – Equifax

Understanding your credit report – Experian

How to read your credit report -Transunion

We have more tips on how to find mistakes on your credit report:

How to find mistakes on your credit report | US PIRG

 

Photo Credit: Bermix Studio on Unsplash

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Authors

Patricia Kelmar

Director, Health Care Campaigns, U.S. PIRG Education Fund

Patricia directs the health care campaign work for U.S. PIRG and provides support to our state offices for state-based health initiatives. Her prior roles include senior director of health policy with the National Consumers League, senior policy advisor at NJ Health Care Quality Institute, and consumer advocate at NJPIRG. She serves on the board of the Patient and Caregiver Engagement Advisory Group for the National Quality Forum. Patricia enjoys walks along the Potomac and sharing her love of books with her friends and family around the world.

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