Understanding medical debt removal and how it will impact the credit reports is important. The three major consumer reporting agencies (Equifax, Experian, and TransUnion) will be implementing changes to medical collections on consumer credit reports.

The changes in medical debt removal will include:

  • Paid medical collections will no longer be reported on consumer credit reports (effective July 1, 2022)
  • Consumers will have more time to work with insurance and healthcare providers prior to it being sent to collections. New medical collections will be added to credit reports after one year has passed. rather than after six months
  • Equifax, Experian, and TransUnion will also no longer report third-party medical collection debt under at least $500 (This will occur later in 2023)

How will this impact the FICO® Score

How this will impact the FICO® score is a very good question. In recent months we have seen an uptick of unpaid medical debts and medical debts can depress the FICO® Score making it harder to obtain certain loans, facilitate having to pay higher interest rates as well as other activities that require a credit examination.

The long-awaited impact on a consumer’s FICO® scores once these changes take effect will not be clears as day.  There are may variables that will be considered, like how old was the collection, the amount of the collection, you current debt to credit ratio’s, and if there is a clear habit of going derogatory.  If the medical collection is a stand alone, the consumer will most likely benefit greatly.


Medical billing Errors

Medical billing errors are almost always likely to happen.  Make sure look over your medical invoices and if there is an issue, contact the hospital right away.   To get your free credit reports go to: www.annualcreditreport.com and if you find that there is an error notify the collection agency and ask for itemized bills or proof that the alleged debt belongs to you.   If you need assistance with understanding your credit report, please contact us at mycreditgroup.com/contact us and ask for a free consultation. Or call 855-598-0446.