Medical debt is a common problem that affects millions of Americans. According to the Consumer Financial Protection Bureau, medical debt accounts for over half of all collections on credit reports.

If you have unpaid medical bills, they can hurt your credit score and make it harder to get approved for loans, credit cards, and other financial products. But don’t worry, there are ways to remove medical debt from your credit report and improve your credit situation.

In this blog post, we will explain how medical debt affects your credit report, what are the new rules for medical debt reporting in 2024, and how to remove medical debt from your credit report using different strategies.

How Medical Debt Affects Your Credit Report

Your credit report is a record of your credit history, including your payment behavior, credit accounts, and credit inquiries. Your credit report is used by lenders, employers, landlords, and others to evaluate your creditworthiness and financial reliability.

One of the factors that influences your credit score is your payment history, which accounts for 35% of your FICO score. Your payment history shows whether you pay your bills on time or not, and how long you have been delinquent on any account.

If you have unpaid medical bills, they can be sent to a collection agency after a certain period of time, usually 180 days. The collection agency will then report the medical debt to the credit bureaus, and it will appear on your credit report as a collection account.

A collection account is a negative item that can lower your credit score and stay on your credit report for up to seven years. The amount of the medical debt, the age of the debt, and the number of collections on your report can affect how much your score drops.

However, medical debt is treated differently from other types of debt on your credit report. Medical debt is considered less predictive of your future credit behavior, and it is often the result of unexpected and unavoidable circumstances.

That’s why the credit scoring models and the credit reporting rules have changed in recent years to reduce the impact of medical debt on your credit score and give you more time and options to resolve it.

What Are the New Rules for Medical Debt Reporting in 2024

In 2024, some new rules will take effect to protect consumers from the negative effects of medical debt on their credit reports. These rules are part of the No Surprises Act, which was passed by Congress in 2020 as part of the COVID-19 relief package.

The No Surprises Act aims to prevent surprise medical bills, limit out-of-network charges, and increase transparency and communication between health care providers, insurers, and patients.

One of the provisions of the No Surprises Act is to change the way medical debt is reported to the credit bureaus. Here are the main changes that will happen in 2024:

• Starting in 2024, medical debt collectors cannot report any medical debt that is less than $500 to the credit bureaus. This means that small medical bills will not hurt your credit score or show up on your credit report at all.

These new rules will benefit millions of consumers who have medical debt or who may face medical bills in the future. They will also make your credit report more accurate and fair, and reflect your true credit behavior.

How to Remove Medical Debt from Your Credit Report

If you already have medical debt on your credit report, or if you have medical debt that is more than $500 and older than one year, you may want to remove it from your credit report as soon as possible.

There are several ways to remove medical debt from your credit report, depending on your situation and your goals. Here are some of the most common and effective strategies:

• Dispute the medical debt if it is inaccurate or outdated. If the medical debt on your credit report is a mistake, or if you have already paid it off, you can dispute it with the credit bureaus and ask them to remove it. You will need to provide proof of your payment or other evidence to support your claim. You can file a dispute online or by mail, and the credit bureaus have 30 days to respond to your request.
• Negotiate with the medical provider or the collection agency to pay for delete. If you can afford to pay some or all of the medical debt, you can try to negotiate with the medical provider or the collection agency to delete the collection account from your credit report in exchange for your payment. This is called a pay for delete agreement, and it can help you clear your credit report and boost your credit score. However, not all creditors or collectors are willing to do this, and you should always get the agreement in writing before you make any payment.

• Apply for medical debt forgiveness or financial assistance. If you cannot afford to pay the medical debt, you may qualify for medical debt forgiveness or financial assistance from the medical provider, a charity, or an organization. Many hospitals and clinics have financial assistance programs for low-income or uninsured patients, and they may reduce or waive your medical bills. You can also look for grants or donations from nonprofit organizations or foundations that help people with medical debt. If you get your medical debt forgiven or paid by someone else, you can ask the creditor or the collector to remove it from your credit report.
• Hire a medical bill advocate to negotiate on your behalf. If you don’t have the time, energy, or knowledge to deal with your medical bills, you can hire a professional medical bill advocate to help you. A medical bill advocate is an expert who can review your medical bills, find errors, negotiate discounts, and resolve disputes with the medical provider or the insurer. They can also help you remove medical debt from your credit report by working with the creditor or the collector. A medical bill advocate may charge a fee for their service, but they can save you money and hassle in the long run.

Conclusion

Medical debt is a serious issue that can affect your financial health and your credit score. But you don’t have to let it ruin your credit report and your future opportunities.

By following the strategies we discussed in this blog post, you can remove medical debt from your credit report and improve your credit situation.

Remember, you have rights and options when it comes to medical debt, and you can always seek help from professionals or organizations if you need it.

We hope you found this blog post helpful and informative. If you have any questions or comments, please feel free to leave them below. And if you need more tips and advice on how to manage your finances and your credit, check out our other blog posts on the fundamentals of finance.