Medical Debt Under $500 No Longer Appears on Credit Reports

By Consumers for Quality Care, on May 3, 2023

The three major credit bureaus will no longer include medical debt under $500 on consumer credit reports, according to The Washington Post.

Lenders use credit reports to determine whether a consumer is a good bet for a loan. Thus, when a consumer’s credit score suffers, so too does the perception of their creditworthiness to lenders. This has, historically, made it harder for consumers with medical debt to get approved for loans and even to rent an apartment or get hired for certain jobs. But with this change from Equifax, Experian, and TransUnion, nearly 70 percent of medical debt sent to collections will no longer appear on credit reports.

The Chief Executives of each company applauded the decision, which will “support greater and responsible access to credit” for consumers.

A report published last year by the Consumer Financial Protection Bureau argued that medical debt should not impact a consumer’s credit score, as this debt is not taken on voluntarily. “Unlike many other consumer debts, people rarely plan to take on medical debt. Two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need. Medical debt is also unique in that people have less ability to shop around for medical services.”

Medical debt should not hamper consumers from living their lives. CQC applauds these efforts and urges more collaboration from both public and private entities to continue to find ways to address the burden of medical debt on millions of Americans.