Medical Debt and Credit Scores: New Rules That Changed Everything in 2023

$88 Billion in Medical Debt Was Removed From Credit Reports in 2023

In a single year, the three major credit bureaus — Equifax, Experian, and TransUnion — removed an estimated 70% of all medical collection tradelines from U.S. credit reports. The change was not accidental. It resulted from a coordinated policy shift driven by CFPB pressure, updated scoring model research, and voluntary bureau action. For roughly 43 million Americans who had medical collections on their reports, the impact ranged from modest score improvements to transformative jumps that unlocked mortgage eligibility.

The Timeline of Changes

Medical debt has been reported on credit files since the 1970s, but its treatment evolved significantly between 2017 and 2023:

• 2017: The three bureaus agreed to a National Consumer Assistance Plan, requiring a 180-day waiting period before medical debt could appear on a credit report. This gave insurance claims time to process.
• March 2022: Equifax, Experian, and TransUnion announced they would remove paid medical collections from credit reports starting July 1, 2022. Previously, paid collections could remain for up to 7 years.
• July 2022: Paid medical collection accounts removed from all three bureaus' files.
• April 2023: Unpaid medical collection accounts under $500 removed from all three bureaus' files.
• January 2025: The CFPB proposed a formal rule to prohibit all medical debt from credit reports. As of mid-2026, this rulemaking remains ongoing.

What Still Appears on Credit Reports

Despite the sweeping 2023 changes, medical debt has not been entirely eliminated from credit reporting. Unpaid medical collection accounts over $500 still appear on reports from all three bureaus and remain there for up to 7 years from the date of first delinquency. The $500 threshold applies per individual collection account, not to total medical debt.

How Much Did Scores Actually Improve?

FICO and VantageScore both conducted research showing that medical collections are weaker predictors of future loan default than non-medical collections. As early as 2016, FICO 9 and VantageScore 3.0 began reducing the weight of medical collections in their scoring calculations. The voluntary 2022–2023 bureau changes affected older score versions too, since the underlying data was simply deleted.

The CFPB estimated that removing medical debt under $500 raised the median credit score of affected consumers by approximately 20 points. For consumers whose only negative items were medical collections, the improvement was often 25 to 50 points — enough to move from subprime to near-prime territory.

Medical Debt on Credit Cards: The Exception

When a patient pays a medical bill using a credit card — including medical credit cards like CareCredit or Synchrony Health — that debt becomes credit card debt. It loses its identity as medical debt entirely and is subject to standard credit card reporting rules. A missed payment on a medical credit card appears on your report as a credit card delinquency and carries full weight in FICO scoring. This distinction is financially significant: patients who use credit cards to avoid immediate medical bills may inadvertently create a worse reporting outcome than if they had let the bill go to collections under the new rules.

Handling Remaining Medical Collections Over $500

For unpaid medical collections over $500, several strategies apply:

• Verify the debt: Request a debt validation letter within 30 days of first contact under the Fair Debt Collection Practices Act (FDCPA). Collection agencies must provide documentation that the debt is valid and that they have authority to collect it.
• Check the statute of limitations: Medical debt has a statute of limitations — the window during which a collector can sue to collect — that varies by state, typically 3 to 6 years. After this period, the debt is "time-barred." Making a payment can reset the clock in some states.
• Negotiate a settlement: Hospitals and collection agencies frequently accept 40% to 60% of the stated balance as settlement in full, particularly on older accounts.
• Request a pay-for-delete: Although the bureaus' official policies discourage this practice, some collection agencies will agree in writing to delete the tradeline upon payment. Get the agreement in writing before paying.

The CFPB Proposed Rule and What It Would Mean

The Consumer Financial Protection Bureau's proposed rule, announced in January 2025, would ban the inclusion of any medical debt on consumer credit reports. If finalized in its proposed form, an additional estimated 15 million Americans would see medical collection accounts disappear from their reports. The rule is grounded in research suggesting medical debt arises from circumstances — illness, insurance gaps, billing errors — that bear little relationship to financial willingness to repay other types of obligations.

Creditors and debt collectors have argued the rule would reduce available credit information, leading to higher loan default rates. The rulemaking process includes public comment periods and potential legal challenges, making the final outcome and timeline uncertain as of 2026.

This article is for informational purposes only and does not constitute financial advice.