Medical Debt Reporting Changes Coming

May 25, 2022
Last updated:
May 18, 2022
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Is medical debt showing up on your credit report making it difficult to buy a house? Good news: medical debt reporting rules are changing, making it easier for buyers to qualify for a home loan.

Have a credit report marred by collections reports for medical bills that have already been taken care of? You’ll be happy to know that you could soon see your credit score rise by up to 100 points or more if you have paid medical debt on your credit report

Medical Debt On Your Credit Report

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. The result is bills that have been paid for medical treatment, but which still show up on your credit report because of the delays in payment that resulted in them running months past due or more.

What can you do about paid medical debt on your credit report? In the past, the answer was: nothing. You were stuck with it. This could make it extremely hard to buy a house or get a decent interest rate, since lenders look at your overall credit score in order to make their decisions.

Medical Debt Reporting Changes Coming

At the beginning of March 2022, the Consumer Financial Protection Bureau (CFPB) issued an important report. In July 2022, there are some major changes to credit reports which are expected to impact one in five consumers by making their report more favorable from a lender’s point of view.

As of July 1, 2022, all paid medical collections will be summarily removed from credit reports. These types of collection actions will also no longer be reported. Just one collection report, even for a small amount, can lower your credit score by as much as 100 points or more.

This makes the new rule great news for people who got trapped between medical providers and insurance companies, causing payments to be late and leading to medical debt reporting to credit bureaus. Even if you were turned down for a mortgage in the past, you might be able to get preapproved now.

The CFPB’s research revealed that a staggering 58% of collections on a consumer’s reports are medical, and the total amount of medical debt on consumer credit reports is currently at $88 billion dollars, meaning nearly three out of five consumers are affected.

Another change consumers have to look forward to as of July 1, 2022, is an alteration in the time frame within which unpaid medical debt can be reported. Formerly, collection agencies were required to wait six months before they could report the debt to the credit bureaus.

With the new rule in place, this time frame is extended to a year, giving consumers more time to work with medical providers and insurance carriers to settle the debt before it is reported to Experian, Equifax, and TransUnion.

Even more good news: in the first half of 2023, any unpaid medical debt totally less than $500 will not be able to be reported at all, and depending on research and negotiations in progress, this threshold could become much higher before it goes into effect. Many people think medical debt shouldn’t be part of a person’s credit report at all.

How These Changes Affect Mortgages

The new rule about reporting medical debt to credit bureaus is going to impact all scoring models. A few years ago, FICO models were updated to weigh medical collections less heavily than the old scoring models, but many lenders including mortgage companies were still using the outdated models.. But it is those older models that are most used, especially by the mortgage industry.

The newer FICO models revealed that people with medical collections on their credit report could have FICO scores an average of 25 points higher than before. Now with these even stronger rules against medical debt reporting, we could see impacts on credit scores reach 100 points difference.

How To Use New Medical Debt Reporting To Your Advantage

After July 1, 2022, ask for a copy of your credit report from all three major credit bureaus. You are entitled to a free report every year and can get yours through a website like You should see any paid medical bills removed.

You can work on your credit to improve it before applying for a mortgage, especially if you were turned down for home financing in the past. Use these tips to fix credit before reapplying: check for inaccuracies, pay down debt, and refrain from opening new credit accounts.

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Why Choose Sammamish Mortgage?

At Sammamish Mortgage, we can help you get fully preapproved 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 in Washington State, we can help you get preapproved. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon, and Washington.

Contact a loan officer 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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