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Can Medical Debt Appear on a Credit Report?

image of bills on a desk marked overdue with a calculator and a person marking with a pen

Debts of many kinds can appear on a credit report and bring down a consumer’s credit score. But a 2021 study by the Consumer Financial Protection Bureau (CFPB) shows that at a whopping 58%, medical debt is the single most significant contributor to debt in collections. In late 2022, the CFPB announced updated procedures for credit reporting and collection agencies to ease the impact of medical debt on consumers. This article discusses what that means for consumers and how to act against agencies that violate the new rules.

Why Credit Reports Matter

Credit scores from an individual’s comprehensive report determine the financial opportunities available to a consumer. A bad score can prevent someone from obtaining credit, but it can also mean higher interest rates on large loans. A higher rate over the same time can make thousands of dollars of difference in the end. For example, a study by Informa Research Services shows that a person with a score of around 620 will pay $65,000 more on a $200,000 loan than someone with a score of 760.

Therefore, it’s essential that a consumer’s score accurately reflects their financial history. Mistakes in a credit report can have long-term repercussions, so collection agencies have a considerable responsibility to follow the law and meticulously check the information they report to bureaus. With updated regulations surrounding debt reporting, these companies will likely lag.

New Rules About Medical Debt on a Credit Report

In North Carolina, 15-20% of consumers have medical debt in collections, making it one of the states with the highest percentage of individuals impacted. The COVID-19 pandemic exacerbated existing issues of medical debt and the problems it causes consumers, prompting action from the CFPB.

The new regulations mandate that any medical debt under $500 cannot be included on a credit report, which would alleviate the impact of bad credit history on many individuals. Two-thirds of medical debt should disappear from credit reports nationwide. This number is not random- most medical debts that appear on credit reports do not exceed $500. Further, charges under the $500 mark are more likely to remain on an individual’s report longer than those over $500.

My Medical Debt is Still There. What Now?

These regulations only came into effect this year, so you might not see a change immediately. However, you have the right to demand corrections from reporting agencies.

  1. Identify the bureau(s) that are reporting the information. Reach out to each company requesting a review (the Federal Trade Commission provides a helpful sample letter for consumers).
  2. The company has 30 days to review your request and must respond in writing.

You may also act against the collector that reported the debt in the first place by following similar steps. If your report needs to be updated appropriately, you should contact an experienced consumer protection attorney for help. Our firm takes most consumer cases on for a contingency fee- meaning you only pay if we win.

Contact Us

If you are having difficulty removing medical debt from your credit report, call our office at (919) 526-0450 or send an email through our contact page. Our intake team does their best to provide appropriate resources to every potential client, even if we can’t take your case.