Your Medical Debt Fell Off Your Credit Report - What Now? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: Oscar Wong/Getty Images July 01, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Ted Rossman is a senior industry analyst at Bankrate.com. He focuses on the credit card industry and helps consumers maximize rewards, get out of debt and improve their credit scores. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Bankrate logo
The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate logo
The Bankrate promise
At Bankrate, we have a mission to demystify the credit cards industry — regardless or where you are in your journey — and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to: Meet you wherever you are in your credit card journey to guide your information search and help you understand your options. Consistently provide up-to-date, reliable market information so you're well-equipped to make confident decisions. Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you. At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next. Bankrate logo
Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Today is a big day in the credit scoring world. Medical debts that have been paid after being sent to collections are coming off credit reports, as are medical collections less than a year old. Medical collections under $500 will also disappear from credit reports early next year, at which point about 70 percent of medical debt in collections will have been eliminated from Americans’ credit reports, . In total, the Consumer Financial Protection Bureau says that 43 million Americans have about $88 billion in medical debt on their credit reports. This is a really big deal. Traditionally, these debts can for seven years. And if a medical collection is the only negative mark on your credit reports, it could trim 100 points or more off your credit scores. Once it is removed, your score could improve by leaps and bounds. If you have other blemishes, however, the removal of a medical collection probably won’t be as significant. It’s always a smart idea to check your credit reports regularly. A great resource is . It’s a government-backed website that is providing Americans with free weekly access to their Experian, Equifax and TransUnion credit reports through the end of 2022. Especially if you’ve had medical debt on your credit reports previously, I suggest checking again now. Medical collections you’ve paid off and medical collections less than a year old should have come off automatically as of July 1, so if they’re still on there, I suggest filing a dispute with each bureau that is displaying the incorrect information. If you’re interested in viewing your credit score, not just the underlying reports, organizations such as and offer free access to all Americans.
How to continue to build your credit
If you saw your credit score spike, you might be motivated to keep the momentum going. And if your score still needs some work, it’s all the more important. The lower your credit score, the more likely you are to be declined for loans and lines of credit. Even if you’re approved, you’ll likely pay substantially higher interest rates. Many of the best tactics for represent more of a marathon than a sprint. Seek to pay all of your bills on time, keep your debts low and show that you can successfully manage various types of credit over the long haul. Still, there are some things you can do quickly. My favorite is to lower your if you can. This refers to credit you’re using divided by credit available to you, especially on revolving accounts such as credit cards. There isn’t a magic number, but a single-digit percentage is best (charging less than $1,000 each month on a card with a $10,000 limit, for example). Most people don’t realize that it’s typically reported as of your statement date, so even if you pay in full (a great practice for avoiding interest), you might still have a high utilization ratio. Potential fixes include making extra payments throughout the month, thereby knocking the balance down before the statement even comes out, or requesting a higher credit limit. Another good tactic is to sign up for an alternative credit scoring system such as . This can improve your credit score by rewarding on-time utility, telecom and streaming payments that haven’t traditionally been factored into credit scoring. You could also consider asking a parent or another trusted individual to add you to one of their credit card accounts as an . As long as they’re using the card responsibly, this positive behavior can help your credit score as well.
Note that your medical debt might come and go
I recently received an email from a reader which helps illustrate some interesting nuances pertaining to how the credit bureaus treat medical debt. This reader, Mona, told me that she has a $356 dental bill in collections. She was not satisfied with the dentist’s work and does not want to pay the bill. Her credit score has dropped from 803 to 681. That’s a big hit from exceptional to just barely over the line of “. Mona was excited to learn that medical collections under $500 will be removed from credit reports in early 2023. She was even more excited to learn that collections less than a year old will be removed before then. The clock starts ticking on the date of first delinquency, which in her case was in Oct. 2021. This collection should come off her credit reports starting today, July 1, because it’s less than a year old. However, in a few months, it can come back on the reports once it hits the year mark. Then it should come off permanently in early 2023 once amounts below $500 are removed. While Mona is excited that her credit score should soon increase, I reminded her that the credit bureaus’ new ways of viewing medical debt do not make the debt go away. She can still be hounded by collections agencies and potentially sued (although I don’t think that’s particularly likely in her case since she owes a relatively small amount). The bigger issue is that, while $356 isn’t chump change, it’s nothing compared to how much a reduced credit score can cost someone over the long haul. If Mona were in the market for a mortgage, for instance, with a credit score of 681 versus 803, the difference would be astronomical. The median credit score for a newly originated mortgage in the first quarter of 2022 was a whopping 776, , so someone with a 681 credit score might not even be approved. If we assume this borrower with a 681 credit score could get approved for a 30-year fixed-rate mortgage, a good rate these days would probably be around 5.5 percent. That compares with about 5 percent for someone with a credit score in the mid-700s or higher. On a $300,000 loan, the more creditworthy borrower would pay $1,610 per month in principal and interest. At 5.5 percent, that rises to $1,703 per month. Over 30 years, that’s a difference of $33,480! Mona tells me she’s not in the market for a loan anytime soon and prefers to ride it out, but for a lot of people, paying a $356 medical collection would be well worth it for the credit score benefits and to get the debt collectors off your back.
How to avoid future medical debt
Unlike most other debts, isn’t usually a conscious choice. It’s often the result of an unexpected, possibly even life-threatening, condition. There’s only so much you can do to protect yourself. Making sure you have adequate insurance coverage is a good starting point, but even then, sometimes you’re left on the hook for significant charges. One thing you can do is conduct some research before scheduling a procedure. Seek in-network doctors whenever possible and compare the out-of-pocket costs charged by different practitioners. The costs can vary widely; . Also, consider asking the doctor or hospital for a payment plan. Many offer patients low- or no-interest financing for several years. Sometimes they even forgive some or all of the charges via charity care programs. The worst they can do is say no. It’s best to start with this approach before considering alternatives. If you have a strong credit score, you might be able to qualify for a as low as about 6 percent. Some credit cards offer lasting as long as 21 months, but tread carefully. The regular interest rate kicks in after the 0 percent term ends, and the average credit card APR is nearly 17 percent. A offered by a reputable nonprofit credit counseling agency such as Money Management International is often a better option.
The bottom line
Recent changes to how the credit bureaus treat medical debt should lift tens of millions of Americans’ credit scores. Keep close tabs on your credit scores and practice solid credit fundamentals to care for your credit score, which is one of the most . Have a question about credit cards? E-mail me at
[email protected] and I’d be happy to help. SHARE: Ted Rossman is a senior industry analyst at Bankrate.com. He focuses on the credit card industry and helps consumers maximize rewards, get out of debt and improve their credit scores. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer.
Related Articles