Is medical debt showing up on your credit report making it more difficult to qualify for a mortgage?
There is some good news: the three major credit bureaus have already made significant changes to how medical debt is reported, making it less likely that certain medical collections will hurt your credit profile.
Have you paid a medical collection that still appears on your credit report? You may be relieved to know that paid medical collections are generally removed from credit reports maintained by Equifax, Experian, and TransUnion.
However, not all medical debt is excluded, and the impact on your credit score depends on the type of debt and the scoring model being used.
Medical bills can be unexpected, difficult to settle, and fraught with credit issues that are not your fault.
As insurance companies try to wiggle out of paying, hospitals may send medical bills over to their collections departments, which in turn report the debt to credit agencies. This can throw a wrench in your home buying process.
This can mean your credit score gets hit with penalties related to debt in collections, even once the insurance company finally comes through and pays it.
Fortunately, the major credit bureaus have changed their policies in recent years. Paid medical collections are no longer included on credit reports, while unpaid medical collections generally aren’t reported until they are at least one year old. Medical collections initially reported at less than $500 are also excluded from credit reports.
These changes can give consumers more time to resolve billing errors, work with insurance companies, or arrange payment before medical debt can affect their credit report.
In January 2025, the Consumer Financial Protection Bureau finalized a rule that would have prohibited lenders from considering medical debt and generally prevented medical debt from appearing on credit reports used for lending decisions.
However, a federal court vacated the rule on July 11, 2025. As a result, the federal rule is no longer in effect.
That means consumers should not assume that all medical debt has been removed from credit reports. Instead, the existing policies established by the three major credit bureaus remain important.
Under those policies, paid medical collections are removed from credit reports. Unpaid medical collections generally must be at least 12 months old before they can be reported, and medical collections initially reported for less than $500 are excluded.
These protections can be particularly helpful for consumers dealing with insurance delays or disputed medical bills. Still, consumers remain responsible for debts even when those debts don’t appear on their credit reports.
Medical collections don’t affect every credit score in the same way.
Newer scoring models, including FICO Score 9 and 10 and VantageScore 3.0 and 4.0, generally give medical collections less weight or exclude them altogether. However, lenders may use different credit-scoring models, so the impact can vary depending on the lender and loan program.
For mortgage applicants, it’s important not to assume that a medical collection will automatically prevent you from qualifying for a home loan. Your overall credit history, debt-to-income ratio, income, assets, down payment, and the specific mortgage program can all affect your eligibility.
If you have medical debt on your credit report, reviewing your credit reports before applying for a mortgage can help you identify inaccurate or outdated information and determine whether an account should have been removed.
If you’re preparing to apply for a mortgage, review your credit reports from all three major credit bureaus. You can obtain free credit reports through AnnualCreditReport.com.
Check carefully for medical collections that have already been paid, accounts that are less than 12 months old, or medical collections initially reported for less than $500. If you find information that appears inaccurate or should no longer be reported, you can dispute it with the appropriate credit bureau.
You can also take other steps to strengthen your credit before applying for a mortgage, including paying down existing debt, correcting errors on your credit reports, avoiding unnecessary new credit accounts, and making all payments on time.
At Sammamish Mortgage, we can help you get fully pre-approved for a mortgage and assist you in overcoming common home buying hurdles, even if your credit isn’t perfect. We even offer free supplementary advice and assistance known as the Diamond Homebuyers Program to help you get your offer accepted when buying a home.
Sammamish Mortgage has been in business since 1992, and has assisted many homebuyers in the Pacific Northwest. If you are looking for mortgage financing, we can help you get preapproved. Sammamish Mortgage offers mortgage programs in Washington, Oregon, Idaho, California, and Colorado, including our fixed-rate mortgages, adjustable-rate mortgages, and jumbo loans.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.
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