Medical debt has historically been a drag on  credit reports and scores for tens of millions of Americans, despite the fact there is often little to no correlation between it and credit “worthiness.”[1]

Recently, the three major credit bureaus announced  that they are overhauling the way medical debt is treated, which will result in the removal of tens of billions of dollars’ worth of medical debt (70%) from credit reports. This includes:

  • Effective July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports.
  • Increasing the delay in posting unpaid medical debts on credit reports from six to twelve months once they have been sent to collections. This gives consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file. Furthermore, the Consumer Financial Protection Bureau (CFPB) has stated its intention to crack down on unlawful medical debt collection and reporting.
  • While some newer credit scoring models already ignore small amounts of medical debt in collections, in the first half of next year, the three major credit bureaus plan is to remove all unpaid medical debt under $500 from credit reports altogether.

These credit reporting changes are important to addressing one of the key impacts of medical debt for many people, but do not solve the larger problem of medical debt–an issue that remains urgent for 79 million Americans who may have to choose between paying their medical bills and basic needs like food and shelter.[2] Fortunately, this April, the federal government took broader actions to disrupt harmful practices by medical providers and debt collectors. Working Credit supports these efforts to hold providers and debt collectors accountable, help over half a million low-income veterans get their debt forgiven, and educate the public with tools to navigate medical debt billing challenges. Visit the CFPB’s website to learn more.

Do you have medical debt on your credit report and not sure how to continue to build credit? Here are Credit Building Tips:

First, if you have medical debt and it’s less than $500, remember this will be removed from your credit report starting early 2023. If the bill is more than $500–and because even if it falls off your credit report, you may still owe the debt–we recommend that you:

  • Review the bill with your insurance company if you have medical insurance, to check for any billing errors.
  • Call the medical provider and see if they have any financial assistance to help you pay the bill. Under new federal efforts, medical providers are required to offer you information about certain options, like Charity Care, that might apply to your situation.
  • If they refer you to the collection agency, then call the collection agency and offer a settlement (not all medical collections can be settled). If not, save to pay the full amount. If you pay/settle after July 1, 2022 then the paid medical collection should fall off your credit report.

Remember, collections in general are important to address, but the biggest impact to your score comes from following the 3 rules of credit building. Before addressing collections, focus on:

–Having at least one open credit account (loan or credit card);

–Paying on time to any credit account that reports to the credit bureaus – never 30 days late; and

–Keeping your credit card balances under 30% of the credit limit on all your credit cards, at all times (even less is better!)

If you are following these 3 credit building rules and are ready to address collection debt, concentrate on the non-medical debt first because of the changes to medical debt.

–Pay off one collection at a time

–Try to save approximately 50% of the amount you owe.

–Call the collection agency and offer to settle the account for the amount you saved.

–Make sure to get a receipt once the collection is paid.

Important Note: Remember that collections fall off your credit report 7 years from Date of First Delinquency with the original creditor, so before you pay off any collection, make sure to find out the “date of first delinquency” for each collection. You can get this information by pulling your free credit report from And, don’t worry – these pulls don’t lower your credit score.

Need help? Contact one of Working Credit’s Credit Building Counselors at!