Medical Debt and Your Credit Report (2025)
Major changes removed 70% of medical debt from credit reports. Here's what's still reported and how to handle it.
Medical debt used to devastate credit scores. That changed dramatically in 2022-2023.
The three major credit bureaus (Equifax, Experian, TransUnion) voluntarily removed most medical debt from credit reports. Here's what the rules are now and what to do if you still see medical debt on your report.
Current Rules (2025)
The credit bureaus now follow these policies:
✓ Medical Debt Rules
- Paid medical debt — Removed from credit reports entirely
- Unpaid medical debt under $500 — Not reported at all
- New medical debt — 12-month waiting period before it can be reported (time for insurance, billing disputes, payment plans)
- Unpaid medical debt $500+ — Can be reported after 12 months
These changes removed approximately 70% of medical debt tradelines from consumer credit reports, affecting nearly 50 million Americans.
The Federal Regulation (and Court Challenge)
In January 2025, the CFPB finalized a rule to ban all medical debt from credit reports entirely. However, in July 2025, a federal court in Texas vacated this rule, finding the CFPB exceeded its authority.
The current situation:
- Federal ban: On hold due to legal challenge
- Bureau voluntary policies: Still in effect (paid debt removed, $500 threshold, 12-month delay)
- State laws: Some states have their own protections (see below)
State Protections
Several states have enacted their own laws banning or limiting medical debt reporting:
| State | Protection |
|---|---|
| New York | Medical debt banned from credit reports |
| Colorado | Medical debt banned from credit reports |
| California | Enhanced protections, restrictions on reporting |
| Illinois | Medical debt cannot affect credit score |
| Washington | Strong medical debt protections |
If you live in one of these states, state law may provide stronger protections than federal rules.
How Scoring Models Treat Medical Debt
Even when medical debt is reported, newer scoring models treat it differently:
- FICO 9: Ignores paid medical collections entirely
- FICO 10: Also treats medical debt more favorably
- VantageScore 4.0: Ignores paid medical collections
- FICO 8: Still counts medical debt (but many removed under bureau policies)
What to Do If You See Medical Debt on Your Report
1. Check If It Violates Current Rules
Dispute medical debt if:
- It's already paid — Should be removed
- It's under $500 — Shouldn't be there
- It's less than 12 months old — Too early to report
- You live in a state with protections
2. File Disputes
Dispute directly with the credit bureaus:
- Experian: experian.com/disputes
- Equifax: equifax.com/personal/credit-report-services
- TransUnion: transunion.com/credit-disputes
State specifically why the debt shouldn't be there (paid, under $500, etc.).
3. Verify the Debt
If you don't recognize the debt, send a debt validation letter to the collection agency within 30 days of their first contact. They must prove:
- The amount owed
- The original creditor
- That you're obligated to pay
4. Check for Insurance Issues
Medical debt often results from:
- Insurance denials that should be appealed
- Balance billing (illegal in many states)
- Billing errors
- Claims filed too late by provider
Contact your insurance company and review Explanation of Benefits (EOB) statements before paying.
Should You Pay Old Medical Debt?
Strategic considerations:
If debt is under $500:
Shouldn't be on your report. Dispute it before paying.
If debt is already paid:
Should already be removed. Dispute if still showing.
If debt is $500+ and unpaid:
Paying removes it under current bureau policies. Consider paying or settling.
If applying for mortgage:
Fannie Mae guidelines explicitly disregard medical collections. May not need to pay for mortgage approval.
Medical Debt and Mortgages
Good news for homebuyers: Fannie Mae guidelines explicitly exclude medical collections from mortgage consideration. Underwriters are instructed to disregard medical debt when evaluating applications.
This means you can often qualify for a mortgage even with unpaid medical debt on your report.
The Bottom Line
Medical debt's impact on credit has been dramatically reduced:
- Paid medical debt: Removed from reports
- Under $500: Not reported
- 12-month waiting period: Time to resolve before reporting
- State laws: May provide additional protection
- Mortgages: Medical collections typically disregarded
If you see medical debt on your credit report that violates these rules, file a dispute immediately. The bureaus are required to remove it.