Medical debt will drop from your credit report as soon as the bill is paid in full. However, healthcare providers must wait at least one year before reporting any unpaid medical debts to credit bureaus. Furthermore, medical expenses under $500 cannot be reported at all. If you see any bills under $500 or bills that have been outstanding for less than a year, you can contact credit bureaus directly to have them remove those unpaid medical debts.
The American healthcare system can be difficult to navigate at times. Understanding how medical bills are handled and whether they are included on credit reports can be challenging. It’s estimated that Americans owe a total of $195 billion dollars in medical debts alone.1 Typically, medical bills affect your credit scores only after they have gone unpaid for a long time. However, it is a good idea to know how to remove medical bills from your credit report and keep up with the recent changes made to how unpaid medical bills are reported to the credit bureaus.
How Your Credit Report Is Compiled
Your credit report plays a crucial role in your financial well-being. Credit can impact what loans and other financial products are available to you. Consumer credit reports make it possible for lenders to properly measure the risk that is involved when working with borrowers. As a consumer, it is important to understand how your credit reports and scores work and what information is included on them so that you can keep track of your creditworthiness and obtain the financial products you need.
There are three major credit bureaus – Experian, TransUnion, and Equifax – that compile credit reports but the information included is essentially the same. There is usually only ever any variance because some creditors might report to one or two credit reporting agencies and not another. However, all credit reporting agencies will include the following categories of information when compiling credit reports:
Personally-Identifying Information
Some personal details are contained within your credit report to connect you to it. This identifying information is not used to determine your credit risk so it won’t be factored into the calculation of your credit score. Details included are your full name, date of birth, Social Security number, address, phone number, and employment information.
Credit Accounts
The most significant portion of your report will be taken up by information about credit accounts in your name. Details of your credit accounts will include the type of account (credit cards, student loans, mortgage loans, cash advances loans online, auto loans, etc.), the date you opened the account, the credit limit or loan amount, your account balance, and payment history.
This information takes up a majority of your credit score’s calculation. In particular, your payment history on all your various credit accounts makes up for 35% of your total score’s calculation!
Credit Inquiries
When applying for new credit of any kind, you are authorizing that lender or credit card issuer to pull a copy of your credit report to determine whether they will approve your application. Each time this happens, a new credit inquiry will show up on your credit report.
Hard inquiries are the only type of credit inquiries that impact your credit score while soft inquiries are a result of checking your own credit or pre-approval offers. A hard inquiry will remain on your credit reports for up to two years, and too many of them within a short period of time can damage your score.
Collection Accounts
When a debt goes without payment for a certain amount of time, from credit card debt and rent to utility payments and medical bills, it will be passed off to a debt collection agency. Once a collection account has been created in your name, the account will appear on your credit reports as a derogatory mark that could bring your credit scores down.
Collection accounts can stay on your credit reports for up to seven years but in most recent credit scoring models, collection accounts that have been paid off will not be factored into your credit score.
Public Records
Credit reporting agencies will also glean their own information when necessary. Public records that are relevant to your credit risk will be pulled from state and county courts. These records could be foreclosures, repossessions, or bankruptcy filings.
Do Medical Bills Show Up On Credit Reports?
Up until now, it has been the case that medical bills are unlikely to show up on your credit reports unless they have gone unpaid for a long time. Most often unpaid medical bills will appear on your credit reports when they have officially been sent to collections, similarly to utility bills and late rent payments.
If you are paying your doctor’s bill or hospital bill on time, it will not be reported to the credit bureaus. Until recent changes, a medical provider would typically wait to send an outstanding medical bill to a debt collection agency at least 90 days with many waiting even longer at 180 days. But recent changes have increased the wait time even longer to protect consumers in the reporting of medical debts.
Recent Changes To How Medical Debt Affects Your Credit
Recently there were new updates announced regarding changes to how medical debt will be reported to the credit bureaus. These changes will lessen the impact of medical debt on your credit reports and lengthen the amount of time debt needs to go unpaid before it can be reported.
- Paid medical debt: As of July 2022, all paid medical debt was erased from consumers’ credit reports.2 If there is any paid medical bill that has remained on your credit report, you should be able to contact the credit bureau to have it removed from your credit report.
- Unpaid medical debt: As of July 2022, there is a year-long waiting period before providers can report unpaid medical debt to the U.S. credit bureaus. Additionally, starting on January 1st, 2023 you can expect to have any unpaid medical bill under $500 no longer appear on your credit reports.2
How To Remove Medical Bills From Credit Report
If there is paid medical debt still on your credit reports or unpaid medical debt under $500, you have the right to dispute the information to the credit bureau who produced the report.
To do this, these are the steps you can follow:
- Gather necessary evidence to prove that the bill has been paid or that the debt is under the threshold of time or amount to be put on your credit report. This could be payment records from the hospital or proof from your health insurance company that the bill was paid, or whatever else might be helpful.
- Contact the credit bureau you wish to file the dispute with. Make your dispute and show your evidence. Make sure to check all of your credit reports so you can dispute the error on multiple reports if it is on more than one.
- The Fair Credit Reporting Act requires that all credit reporting agencies follow up on all error disputes. You can keep in contact with the bureaus so you can keep up with the status of your disputes. They may ask you to provide further documentation in the processing of the medical collections dispute.
Additional Information About Removing Medical Debt From Credit Reports
| Aspect | Description |
| Online Dispute Platforms | Many credit reporting agencies offer online platforms where consumers can file and track disputes easily. |
| Dispute Resolution Timeline | Credit reporting agencies usually respond within 30 days, but complex disputes may take up to 45 days. |
| Follow-Up | It’s essential to follow up on the dispute to ensure that it is being processed and resolved. |
| Legal Assistance | In complicated cases, legal assistance might be necessary to navigate the dispute process. |
| Monitoring Credit Reports | Regularly monitoring your credit reports helps in identifying and disputing errors promptly. |
| Documentation | Keep detailed records of all communications, including dates and the names of people you spoke to. |
| State Laws | Be aware of state-specific laws that may impact the dispute process and medical billing. |
| Consumer Rights | Understanding consumer rights under the FCRA can empower consumers during the dispute process. |
| Contacting the Creditor | Direct communication with the creditor might help in resolving the issuer before it escalates. |
| Impact of Partial Payments | Understand how making partial payments might impact the status of the medical debt and credit reports. |
Tips For Improving Your Credit Score
Removing your medical debt that has already been paid or a medical bill that should not be on your credit profile in the first place could make a significant improvement in your credit score. But if you are interested in boosting your credit score even further, there are additional actions you can take unrelated to your medical debt altogether.
Make Your Payments on Time
Your payment history accounts for 35% of your credit score according to the FICO credit scoring model. Late or missed payments can seriously bring down your score so to improve your credit history, it is necessary to consistently make on-time payments on all credit cards, installment loans, or retail accounts. Don’t allow any credit accounts or utilities to be sent into collections. This also applies to medical bills over $500 sent into medical collections if they’ve gone unpaid long enough.
Get Credit for Bills Your Already Pay
While you typically never get credit for bill payments like electricity, rent, and gas, there are services now that will report these monthly expenses to the main credit reporting agencies. These necessary expenses are already bills you need to cover so you might as well get credit for them on your credit profile like you would for mortgage payments.
Getting these payments added to your credit profile could allow you to build up an impressive credit history far more quickly than you would be able to otherwise.
Reduce Your Overall Debt
To have optimal credit health, it is wise to keep your credit card balances low to keep your credit utilization ratio within the recommended range. Your credit utilization ratio compares your used credit to the available credit you have in total. Most financial experts recommend a credit utilization rate under 30%.
Stop Applications for New Credits
While attempting to raise your credit score, it is a good idea to take a break from applications for credit. Stop filling out applications for loans, credit cards, and the like for a couple of months or a year or two if you can. Minimizing the changes to your credit profile other than rounding out your payment history will make sure that nothing gets in the way of raising your score.
Be Consistent and Patient
Keep up with the changes that you are making and maintain the good habits you are forming in the process. Soon you will see a credit score that reflects your hard work and you will have the financial peace of mind that excellent credit can give you.
FAQ: Removing Medical Expenses from Credit Reports
The process time varies based on the complexity of the dispute and the responsiveness of the credit reporting agencies and medical collections agency involved.
The success rate depends on the validity of the dispute and the documentation provided to support the claim.
Generally, disputing items on your credit profile is free, but you might incur costs if you choose to hire professional help or need to obtain documents from the medical provider or insurance company.
Risks include the possibility of the dispute being rejected, which might require further actions or adjustments to your approach.
Removing medical expenses from your credit profile can improve credit scores and overall creditworthiness.
Alternatives include negotiating directly with the provider or medical collections agency, or seeking assistance from a credit counseling agency.
Consequences of not removing medical expenses include a lower credit score and difficulties in obtaining credit or loans.
Limitations include the accuracy of the bills and the responsiveness and policies of the credit reporting agencies and medical collections agency.
Next steps include gathering necessary documentation, filing a dispute with the credit reporting agencies, and following up regularly.
To improve chances of success, ensure you have all necessary documentation, communicate effectively with the credit reporting agencies, and consider consulting with professionals if necessary.
It can take 30 to 45 days for the credit reporting agencies to investigate the dispute.
You can dispute by contacting the credit reporting agencies directly, providing evidence, and clearly stating the reasons for the dispute.
Removing medical expenses may positively impact your credit score by eliminating negative items.
Credit repair agencies, lawyers specializing in credit repair, or doing it yourself are options for removing medical expenses.
Contact the credit reporting agencies to dispute the charges and the medical provider or medical collections establishment to verify or settle the debts.
The credit reporting agencies are responsible for updating your credit profile based on the dispute’s outcome.
The process involves filing a dispute with the credit reporting agencies, who will then investigate and make necessary adjustments based on the findings.
Eligibility depends on the accuracy of the medical bills, whether they are paid, and whether proper procedures were followed by the medical provider and medical collections agency.
Not removing medical expenses can lead to lower credit scores, making it challenging to obtain credit, loans, or favorable interest rates.
You can find this information on your credit report, which lists all debts, including those sent to collections.
You can obtain your credit reports for free annually from the three major credit reporting agencies or through various online services.
Help can be obtained from credit repair agencies, legal professionals, your medical insurance company, or non-profit credit counseling organizations.
A Word From CreditNinja on Removing Medical Bills from Credit Reports
Worried about unpaid medical collections being a drain on your finances? Thanks to new policies, consumers have a year to pay debts before they are sent to a medical collection agency, and consumers with a bill of under $500 don’t have to worry about it being reported at all!
However, CreditNinja always suggests consumers put forth their best efforts to pay any outstanding bills, whether they be bills for medical purposes, bad credit loans, or payday loans.
Ready for more information about handling your budget, navigating installment loans, and more? Check out the CreditNinja dojo for hundreds of free resources!
References:
1. The Burden of Medical Debt in the United States | KFF
2. As of July 1, your medical debt may no longer hurt your credit score—here’s why | CNBC
