How to Eliminate Under-$500 Medical Debts on Credit Reports

Contents in this Article...

Imagine receiving an unexpected medical bill that throws your financial life into disarray. It’s a situation that many people face, but understanding the impact of medical debt on credit reports and recent changes to medical bills credit report can help mitigate its effects. In this post, we’ll explore the intricacies of medical debt, how it affects credit scores, and strategies for managing medical bills credit report.

Short Summary

  • Recent changes in medical debt reporting have been implemented to reduce the impact of unpaid collections with balances under $500.

  • Poor, rural communities are disproportionately affected by medical debt totaling approximately $88 billion across the US.

  • Strategies for managing medical debt include regularly monitoring credit reports and scores, reviewing insurance coverage, negotiating payment plans and seeking financial assistance from sources such as crowdfunding or nonprofits.

Understanding Medical Debt and Its Impact on Credit Reports

A person looking at their credit report, showing medical debt

Medical debt is a result of accrued expenses for medical services such as doctor visits, hospital stays, and prescription drugs. It can negatively impact credit reports, making it more difficult to obtain credit, purchase or rent a home, or acquire employment. Unpaid medical bills can be especially detrimental to credit scores, as medical debts are reported on credit reports after being sold to collection agencies and becoming overdue.

Recent changes to medical debt reporting may offer some relief. The credit reporting agencies have implemented alterations that could eliminate 70% of medical collection debt from consumer credit reports. Paid medical collection debt will be removed from credit reports beginning July 1, 2022, and medical collection debt under $500 will not appear on credit reports beginning in 2023. These changes can assist in reducing the negative effect of medical debt on credit reports.

To manage medical debt effectively, it’s essential to pay it down, establish a payment plan, negotiate bills, or obtain financial assistance. Individuals should also attempt to resolve the issue with their healthcare provider and health insurance company to minimize the impact on their credit. If unable to pay the bills, seeking help from other organizations or engaging a medical billing advocate may be necessary.

Recent Changes to Medical Debt Reporting

A person looking at their credit report, showing recent changes to medical debt reporting

Recent changes to medical debt reporting include the elimination of paid medical collections and the reduction of the impact of unpaid medical collection debt with balances of less than $500. These changes are anticipated to benefit numerous individuals, particularly those who are younger and receive lower wages, as they rely on a good credit score to acquire an apartment or an economical loan.

These modifications are part of the Biden-Harris administration’s plan for medical debt reforms, which also includes directing the Department of Health and Human Services to examine providers’ billing practices and assisting veterans in obtaining medical debt forgiveness.

Removal of Medical Collections with Balances of $500 or Less

Credit bureaus will no longer report medical collections with balances of $500 or less, reducing the impact on consumers’ credit scores. This change was implemented to minimize the influence on credit scores and could potentially increase scores for certain consumers.

The nationwide credit reporting companies have declared the removal of medical collections under 0 from consumer credit reports, meaning these debts will no longer be included in credit scoring computations. This can have a beneficial impact on individuals’ credit scores and make it easier for them to access credit in the future.

Data Shows Medical Debt Highest in Poor, Rural Communities

A map of the US, showing poor, rural communities with the highest medical debt

Medical debt is most prevalent in poor, rural areas. The Consumer Financial Protection Bureau published a report last month indicating that approximately billion of medical debt is being faced by millions of Americans.

States like New York and Colorado have recognized the need to address this issue and are implementing comprehensive consumer protections against medical debt.

New York Set to Become Second State, Following Colorado, to Implement Comprehensive Consumer Protections Against Medical Debt

An image showing a medical bill with the words medical bills credit report highlighted, representing the new consumer protections against medical debt in New York, following Colorado's lead.

New York follows Colorado in implementing comprehensive consumer protections against medical debt, aiming to reduce its impact on credit scores. Governor Hochul signed legislation to ensure patients are protected from medical debt and to prohibit its collection by credit reporting agencies.

These safeguards will assist in mitigating the effect of medical debt on credit ratings.

How Unpaid Medical Bills Affect Your Credit Score

A person looking at their credit score, showing how unpaid medical bills affect it

Unpaid medical bills can hurt credit scores, with insurance companies and medical providers playing a role in the process. Generally, healthcare providers do not report to credit bureaus; however, unpaid medical debt may be passed on to collection agencies, which can have an adverse effect on your credit score.

It is essential to pay your medical bills punctually to avoid any negative influence on your credit.

Insurance Company’s Role

Insurance companies can assist in preventing medical debt from impacting credit scores by:

  • Paying claims promptly and accurately

  • Determining the amount they will cover for medical services based on the policyholder’s insurance plan

  • Negotiating rates with healthcare providers

  • Paying a portion of the bill directly to the provider

The remaining balance, known as the patient’s responsibility, is billed to the patient and, if not paid, can result in unpaid medical bills.

Medical Provider’s Responsibility

Medical debt can be a significant burden for many individuals, and it’s essential for a medical provider to play a role in preventing it from affecting credit scores. By offering payment plans or financial assistance, medical providers can help patients manage their medical bills more effectively. Before reporting unpaid medical bills to credit bureaus or selling them to debt collectors, medical providers are expected to make reasonable attempts to collect the outstanding amount.

In the event that bills remain unpaid and the patient’s estate does not possess enough assets to cover the debt, the provider may opt to write off the unpaid bills.

Strategies for Managing Medical Debt

A person looking at their credit report, showing strategies for managing medical debt

Managing medical debt effectively involves a combination of strategies, including reviewing and paying bills on time and seeking help from credit repair companies or nonprofits. It is advisable to review each medical bill, as understanding the charges and ensuring their accuracy can help prevent medical debt from negatively impacting credit scores.

In cases where patients are having difficulty paying their medical bills, they may wish to inquire with the medical provider’s billing department to determine if there is a financial aid program available to assist with these expenses.

Reviewing and Paying Bills on Time

Timely payment of medical bills can avert them from having an effect on credit scores. Regularly reviewing and paying bills is beneficial for several reasons.

  • Enhancing credit scores

  • Preventing late fees

  • Establishing financial control

  • Creating a positive payment history

  • Minimizing stress

Failure to review and pay bills in a timely manner may result in late fees, increased interest rates, and harm to credit scores.

Hiring a Credit Repair Company or Seeking Nonprofit Help

Hiring a credit repair company or seeking help from a nonprofit can assist in managing medical debt and protecting credit scores. Credit repair companies have the experience and resources to swiftly and efficiently dispute inaccurate or outdated information on credit reports, although they may be costly.

Nonprofits can offer support with medical debt, such as aiding in negotiating payment plans or furnishing financial counseling, yet they may not have the resources to quickly and efficiently dispute inaccurate or outdated information on credit reports.

Removing Medical Debt from Your Credit Report

Removing medical debt from credit reports can be achieved by monitoring credit reports, contacting medical providers or collection agencies, and filing disputes. By regularly reviewing credit reports for medical debt, individuals can ensure that any errors or modifications are detected and rectified. In cases where medical debt has already been sent to collections, it is important to ensure that the debt collector has not included any additional fees in the total amount due.

Documentation required to dispute medical collections on credit reports may include documentation from the collection agency, insurance company, or health care provider, copies of canceled checks, or a credit card statement indicating that the bill has been settled. If an inaccuracy related to medical debt is discovered on a credit report, it is recommended to contact the collections agency to address the issue and dispute the mistake with the credit reporting agency.

In addition to filing disputes, individuals should take action if they detect that a debt collector has added unauthorized fees. Notifying the Federal Trade Commission, CFPB, and state attorney general of the issue can help rectify the situation and, if the additional fees are identified within a year of the collector’s violation of the law, individuals may opt to file a lawsuit against the debt collector to have the fees removed.

Preventative Measures to Protect Your Credit from Medical Debt

Preventative measures to protect credit from medical debt include reviewing insurance coverage, negotiating payment plans, and seeking financial assistance. Implementing measures to review insurance coverage may involve consulting with the insurance company and engaging the services of a billing advocate.

Negotiating unmanageable bills and seeking financial assistance are two potential strategies for negotiating payment plans. Options for obtaining financial assistance include crowdfunding and seeking support from nonprofit organizations. Crowdfunding medical bills can provide financial assistance from family, friends, and strangers, potentially making a significant difference in managing medical debt.

Monitoring Your Credit Amidst the Medical Debt Crisis

A person looking at their credit report, showing how to monitor it amidst the medical debt crisis

It is essential to monitor credit reports and scores in order to effectively manage medical debt and ensure financial health. Regularly reviewing credit reports can help identify and rectify any errors or modifications, including medical debt. Free resources, such as CreditWise from Capital Markets, are available for tracking credit and providing access to credit reports and scores without adverse effects on credit scores.

CreditWise from Capital Markets is a complimentary resource that provides access to free TransUnion credit reports and weekly VantageScore 3.0 credit scores without any negative effects on scores. By using tools like CreditWise, individuals can monitor their credit and stay informed about their financial health amidst the medical debt crisis, especially since TransUnion is one of the three major credit bureaus.


In conclusion, understanding the impact of medical debt on credit reports and employing strategies for managing medical bills can help individuals navigate the medical debt crisis. By monitoring credit, reviewing insurance coverage, negotiating payment plans, and seeking financial assistance, it is possible to minimize the negative effects of medical debt on credit scores and maintain financial health. Stay proactive and informed about your credit amidst the medical debt crisis to ensure a brighter financial future.

Frequently Asked Questions

Do medical bills hit your credit report?

Medical bills can affect your credit report if they are not paid and are sent to collection agencies. This is an increasingly common issue, with 43 million people in the US having unpaid medical bills on their credit records in 2021.

Will medical debt be removed from credit report in 2023?

From April 11th, 2023, medical debt collections of less than $500 will be removed from credit reports nationwide.

This decision has been made by the three major consumer reporting companies.

Will medical debt under $500 be excluded from credit report?

Medical debt under $500 should no longer appear on credit reports according to the major credit reporting agencies. This change has already been implemented by the Consumer Financial Protection Bureau.

Is medical debt being wiped off credit report?

As of July 2022, paid medical collection debt is no longer included on U.S. consumer credit reports, making it easier to get credit, buy or rent a home, and find employment.

Consumer reporting companies removed medical collections under $500 from consumer credit records in April 2023.

Will medical debt be forgiven?

Yes, medical debt can be forgiven through hospital bill forgiveness programs that provide relief to people who can’t afford to pay their bills. These programs are often run by nonprofit organizations or government agencies, and they can provide a much-needed lifeline for those struggling with medical debt. In some cases, the debt can be completely forgiven, while in others, the debt can be completely forgiven.