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Medical Debt and Your Credit Score: What Changed, What Didn't, and What to Do Right Now

Kelly B. Hunter, FCRA & FDCPA CertifiedWinning Credit Solutions, LLCMay 20267 min read

The Hook

You had surgery three years ago. The hospital billed your insurance. The insurance paid part. The rest — $1,400 — got sent to collections because nobody told you there was a balance. You found out when a lender pulled your credit and told you the collection was why you didn't qualify. The medical procedure that was supposed to heal you cost you a mortgage.

This is not an unusual story. The Consumer Financial Protection Bureau estimated in 2022 that medical debt affected the credit reports of roughly 43 million Americans, and that a disproportionate share of those consumers had no other negative items on their files — meaning medical debt was often the only thing standing between a clean credit profile and a damaged one. What happened between 2022 and 2025 changed the rules significantly. But not completely.

"Medical debt was often the only thing standing between a clean credit profile and a damaged one."

What Changed

The bureau changes of 2023 and the CFPB rule of 2025

Starting in July 2022, the three major credit bureaus — Equifax, Experian, and TransUnion — announced a series of voluntary changes to how they handle medical debt collections. First, they stopped including paid medical debt collections on consumer credit reports. Second, beginning in March 2023, they stopped including medical collections with a balance under $500. Third, they extended the one-year waiting period before any medical collection could appear on a credit report — giving consumers more time to resolve billing disputes before damage was done.

Then, in January 2025, the CFPB finalized a rule that went further: banning medical debt from credit reports entirely. The rule was immediately challenged in federal court, and as of mid-2026, its enforcement status remains in legal dispute. That means the voluntary 2023 bureau changes are currently the most reliable layer of protection in place — not the federal rule.

What this means practically: if you have an unpaid medical collection over $500 from before the bureau changes took effect, there is a real chance it is still on your report. If it appeared after March 2023, it should not be there — and if it is, that is a dispute waiting to be filed.

What Didn't Change

The collections that are still there

The 2023 voluntary changes only addressed collections reported through the major bureaus. Specialty credit reporting agencies — including those used by some landlords, insurance companies, and certain lenders — were not part of those agreements and may still carry medical debt information. If you have been denied for rental housing or an insurance policy, a specialty report may be the reason.

The changes also did not affect older medical collections that were already on your file and had been there for years before the policy shift. Equifax, Experian, and TransUnion removed qualifying items, but the removal process was not perfect. CFPB research from 2023 found that some consumers still had medical collections on their reports that should have been removed under the new policy. Checking your reports was necessary then. It remains necessary now.

Additionally, a medical collection that was initially valid but has since been resolved, paid by insurance, or discharged through a hospital's charity care program may still appear on your file as a negative item if the collection agency did not update its reporting. That is an accuracy dispute, and it is one of the more straightforward cases an FCRA-certified strategist can address with documentation from your provider.

"A collection that was paid by insurance may still appear on your file if the agency never updated its reporting. That is a dispute waiting to be filed."

How Scoring Models Treat Medical Debt

FICO 9, VantageScore 4.0, and why your lender's version may differ

Even before the 2023 bureau changes, the scoring models used for mortgage underwriting — FICO 8, FICO 2, FICO 4, FICO 5 — weighted medical collections the same as any other collection. A $300 medical bill in collections could cost you 50 to 100 points depending on your starting profile, the age of the item, and what else was on your file.

FICO 9 and VantageScore 4.0, both released in 2014 and 2017 respectively, reduced the weight of medical collections significantly — and ignored paid medical collections entirely. The problem is that most mortgage lenders were still required by Fannie Mae and Freddie Mac guidelines to use older scoring models through 2024. Fannie Mae and Freddie Mac announced a transition to FICO 10T and VantageScore 4.0 for conventional loans, with implementation beginning in late 2025. That transition matters: if your lender is now using a newer model, a medical collection that would have cost you 80 points under FICO 8 may cost you far less — or nothing at all — under FICO 10T.

FHA, VA, and USDA loans still have their own underwriting guidelines, and manual underwriting on government-backed loans may still flag medical collections regardless of score impact. If you are applying for one of those programs and have medical collections, that is a conversation to have with your loan officer before the application hits underwriting.

What to Do Right Now

A specific action sequence

If you have — or suspect you have — medical collections on your credit file

  1. Pull all three of your credit reports. The only way to know what is actually on your file is to look. Go to www.smartcredit.com/WinningCredit to access your tri-merge report. Annual Credit Report only shows you one bureau at a time, and it does not give you a score.
  2. Identify every medical collection by original creditor and date. Collection agencies often purchase debt and re-report it under their own name. The original provider name may not appear on your report. Call the collection agency and ask for the name of the original creditor and the date of service.
  3. Request an itemized bill from the original provider. Medical billing errors are common. The CFPB has documented cases where insurance payments were applied incorrectly, duplicate charges appeared on the same account, and charity care applications were lost. You cannot dispute an inaccuracy you cannot document. The itemized bill is the starting point.
  4. Check whether the balance was under $500 as of March 2023. If it was, it should not be on your report. If it is, that is a factual dispute grounded in the bureau's own stated policy — and a certified strategist can document and file it with that specific basis.
  5. Verify whether insurance should have covered the balance. Contact your insurance company and request an Explanation of Benefits for the date of service. If the EOB shows the claim was paid or denied due to a billing error, that is documentation for a dispute to the collection agency and the bureau.
  6. Do not pay before you investigate. Paying a medical collection without first confirming it is valid, accurate, and still legally collectable can restart activity on an account that was close to the seven-year removal window. Work with a certified strategist before sending any payment.

The rules around medical debt have shifted more in the last three years than in the previous two decades. That is good news for consumers — but it also means the landscape is complicated in ways that require someone who knows both the FCRA and the current bureau policies in detail. If medical debt is on your file and it is affecting your approvals, it is worth a professional review before your next application.

Pull your reports at www.smartcredit.com/WinningCredit first. Then contact us. We will tell you exactly what is worth disputing, on what grounds, and what to expect.

Sources & References

Winning Credit Solutions, LLC

Medical debt may have already damaged your profile. Find out exactly what's there.

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