What Types of Medical Debt Will Now Be Erased from Your Credit Report

If you know how to read a credit report, that skill can be useful. When you look at one of the reports that are generated by Equifax, TransUnion, or Experian, you can see how each of these major credit bureaus calculates your score.

Your score matters since it’s what banks and credit unions use to figure out whether they should lend you any money. Landlords also use these reports when determining whether you’re a suitable candidate to move into a house or apartment. Credit card companies look at these reports when you apply to open a new account.

You may have heard that some medical debt will now be erased from your credit report. That’s good news for consumers, but which types will be erased according to the new rules that the credit bureaus are establishing?

We’ll answer that question right now.

Medical Debt Less than $500

The key change regarding medical debt you can soon expect from the major credit bureaus involves debt from medical sources less than $500. Medical debt might include outstanding bills you owe to a doctor’s office, hospital, clinic, or private practice.

The credit bureaus have targeted mid-2023 as the approximate time they will make this change. TransUnion seems to be the one that’s going to get a head start on the others. It has stated that it will update its policy by the end of April, which is just a few weeks away.

What About Cleared Medical Debt?

One additional change you should know about regarding medical debt and credit reports concerns cleared medical debt. Cleared debts are ones that you have paid already.

If you pay off a debt and you’ve signed up for a service like Experian Boost, those payments will be reported to the major credit agencies, and that should gradually raise your score. If cleared medical debt no longer gets counted on your credit report, though, you will not see your score rise when you pay off your medical bills.

That change has already gone into action. The credit bureaus started doing it around the middle of last year.

Medical Debt More than Seven Years Old

You should also know that if you have medical debts that exceed $500 and you owe a medical entity that money for seven years or more, that debt will no longer be counted against your credit score.

Consumers who have long-term medical debts, such as those from surgeries, should be glad to hear that. However, keep in mind that just because those long-term debts will not be counted against your score after seven years, that doesn’t mean the entities to which you owe money have forgiven those debts. You still need to pay them.

Keep These Medical Debt Changes in Mind

When you look at your report from one of the major credit bureaus, remember the changes we’ve mentioned concerning medical debts. If you have debt over $500 that is more than seven years old, it will no longer be counted against your score. You must still pay it back, though.

If you have medical debt that’s $500 or less, soon, the major credit agencies will not count that against your score. By the middle of this year, all three of the main bureaus will have made this policy change.

Also, a change has already been made regarding cleared medical debt. It is no longer being used as a way of boosting your credit score. You will have to rely on other methods if you’re trying to increase your score, such as low credit utilization.

Now, you know all about the changes in policy regarding medical debt that the three major credit bureaus have implemented or that they’ll soon put in place.