Medical Debt and Credit Reports

Medical debt is the most common type of collection account on US credit reports. The relationship between healthcare bills, debt collection, and credit reporting has been in rapid flux since 2022, with the three major credit bureaus making voluntary changes and the CFPB proposing to go further. Understanding the current rules — and your rights when errors appear — helps you protect your credit and respond effectively to any medical debt situation.

How medical debt gets onto a credit report

A medical bill does not automatically appear on your credit report the moment you receive it. The process typically unfolds over several months:

1. You receive care and are billed by the provider.
2. The provider’s billing department attempts to collect payment, usually for 60 to 180 days.
3. If the bill remains unpaid, the provider may sell or assign the account to a third-party debt collector or collections agency.
4. The collections agency, now acting as the account holder, may furnish the account to the credit bureaus.
5. The collection account appears on your credit report, typically remaining for up to seven years from the date of the original delinquency.

For patients at nonprofit hospitals, IRS 501(r) rules require the hospital to complete a minimum 120-day good-faith effort before initiating extraordinary collection actions, including selling the debt to collectors. During this period, applying for financial assistance can stop the debt from escalating. Details are in the Hospital Financial Assistance and Charity Care guide.

What changed in 2022 and 2023

Prior to 2022, medical collections functioned largely like any other collection account — they appeared on your credit report once furnished and could remain for up to seven years regardless of whether you paid them. Beginning in 2022 and continuing through 2023, the three major credit bureaus — Equifax, Experian, and TransUnion — made a series of voluntary changes:

• Paid medical collections removed: All three bureaus agreed to remove paid medical collection accounts from credit reports. Previously, even a paid collection could stay on your report for up to seven years. Now, once you pay the debt, the collection disappears.
• One-year waiting period extended: The bureaus extended the period between when a medical account first goes to collections and when it can be reported, giving consumers more time to work out payment or apply for assistance.
• Collections under $500 removed: Beginning in 2023, all three bureaus stopped including medical collection accounts with a balance below $500. If a medical debt in collections totals less than $500, it does not appear on your credit report under this standard.

These changes were voluntary — they were not required by any federal law at the time — and they apply only to the major consumer reporting agencies, not to every specialized credit reporting company or data furnisher.

The CFPB’s 2024 proposed rule

In January 2024, the Consumer Financial Protection Bureau proposed a rule that would go significantly further than the voluntary bureau changes. The proposed rule would:

• Prohibit credit reporting agencies from including any medical debt in credit reports.
• Prohibit lenders from using medical debt information in credit decisions, even if they obtain it from sources outside a consumer’s credit report.

The proposal was motivated by CFPB research finding that medical collections are a poor predictor of creditworthiness — meaning they penalize consumers without helping lenders assess repayment likelihood accurately. The rule was under the standard notice-and-comment rulemaking process as of this review date. If finalized, it would remove medical collections from the credit reports of an estimated millions of Americans.

Current rules at a glance

Medical debt scenario	Current credit reporting treatment
Bill received, payment in progress	Not reported — reporting begins only after collections
Bill in collections, balance under $500	Not reported (as of 2023 bureau changes)
Bill in collections, balance $500 or more, unpaid	May appear after a waiting period
Bill in collections, subsequently paid	Removed from report (as of 2022 bureau changes)
Bill in collections, account settled	Removed from report if paid; collector may note “settled”
Bill in collections, more than 7 years old	Must be removed under Fair Credit Reporting Act

These rules reflect the voluntary bureau changes and FCRA requirements. The proposed CFPB rule, if finalized, would change the “may appear” row to “not reported.”

How to check and dispute your credit report

You are entitled to free weekly credit reports from all three major bureaus at AnnualCreditReport.com — the only site authorized by federal law to provide free reports. Review each report for:

• Medical collections you do not recognize
• Collections already paid that have not been removed
• Collections under $500 that should not appear
• Collections older than seven years that should have aged off
• Incorrect amounts, dates, or account information

If you find an error, dispute it. Under the Fair Credit Reporting Act:

1. File a dispute with the credit bureau — online, by mail, or by phone. Include your name, address, account number, and a clear explanation of the error. Attach any supporting documents.
2. The bureau has 30 days to investigate (45 days in some circumstances) and must forward your dispute to the data furnisher (typically the collector or original creditor).
3. The furnisher must investigate and report back to the bureau. If the information cannot be verified, it must be removed.
4. You receive a written result. If you are not satisfied, you can request that your dispute statement be included in your file.

You can also dispute directly with the data furnisher — the debt collector or billing company that reported the account — by sending a written dispute. Send dispute letters by certified mail and keep copies.

Documents and terms you’ll see

When dealing with medical debt and credit reports, you are likely to encounter these terms in correspondence and on official reports:

• Credit report — the document produced by a credit bureau listing your accounts, balances, payment history, and public records; you are entitled to free copies at AnnualCreditReport.com
• Medical debt — unpaid healthcare bills; treated differently from other consumer debt in recent credit reporting rule changes
• Collections — an account transferred to a debt collector after the original creditor could not obtain payment; how most medical debt ends up on credit reports
• CFPB — the Consumer Financial Protection Bureau, which oversees credit reporting agencies and debt collectors and is the primary place to file complaints about credit reporting errors or debt collection violations

The statute of limitations: what it means for older debt

The statute of limitations is the period during which a creditor can sue you in court to collect a debt. It is separate from the credit reporting period. Once a debt is past the statute of limitations, a collector cannot win a lawsuit to force payment — but the underlying debt does not disappear, and a collector may still attempt to contact you.

Statutes of limitations for medical debt vary by state, typically ranging from three to six years from the date of last payment or service. Do not make a partial payment on very old debt without understanding your state’s rules: in some states, a payment restarts the clock, potentially re-exposing you to a lawsuit.

If a collector contacts you about an old medical debt, ask for written verification of the debt before doing anything else. The When a Bill Goes to Collections page explains your rights in that situation.

For a broader overview of your rights around medical debt — including negotiating bills and financial assistance options — see the Medical Debt and Your Rights guide.