Nationwide Consumer Reporting Companies to Exclude Most Medical Debt from Credit Reports

07 April 2022

Montpelier, VT – The nation’s three largest credit reporting agencies on Friday announced major changes to how medical debt affects consumer credit ratings.

Beginning July 1, 2022, Equifax, Experian, and TransUnion will remove nearly 70% of medical debt from Americans’ credit reports. The obligation to pay the debt however will remain. Low credit scores can have a material impact on consumers by reducing credit access, increasing the cost of accessing credit, making it more difficult to secure a job or housing, and lowering individuals’ self-esteem.

The companies also announced new rules doubling the time it takes medical debt in collections to impact credit reports from six to twelve months. Beginning in 2023, the three agencies will no longer include medical debt under $500 in consumer credit reports.

“This is a very welcome move for consumers, especially as we recover from a pandemic that has had a profound impact on the health of Vermonters,” said Commissioner Michael S. Pieciak. “It is estimated there are more than 30,000 individuals in our state currently struggling with medical debt in collections. This announcement will have a significant impact by improving the credit worthiness of tens of thousands of Vermonters. However, more work is needed as the underlying debt remains, and medical bills continue to be the leading cause of bankruptcy in the United States.”

Commissioner Pieciak noted that unlike other kinds of consumer debt such as mortgages or personal loans, medical debt is a particularly poor indicator of an individual’s ability to make future payments as it is often a result of emergencies and can differ widely based on insurance coverage and hospital billing practices. Because of this, many Vermont based financial institutions already had a practice of discounting the impact of medical debt in lending decisions.

The Consumer Financial Protection Bureau (CFPB) also notes that people of color, young adults, and low-income individuals are more likely to carry medical debt. As a result, this move has important nation-wide implications for financial equity.

The CFPB, which earlier this month advocated for changes to credit reporting, says Americans hold at least $88 billion worth of medical debt impacting consumer credit. The Bureau reported that as of 2021, medical debt was by far the leading cause of debt in collections affecting Americans’ credit reports.

DFR also reminds consumers that under the recently enacted federal No Surprises Act, insurance companies and health care facilities are banned from sending surprise bills for most emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance service providers.

Consumer Resources:

DFR encourages consumers to reach out to the Department’s consumer team if you have received a surprise bill for medical services toll-free at (800) 964-1784 or email

Consumers who have questions about their credit report or would like to dispute an item contained in their credit report are encouraged to contact the credit reporting companies at:

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Department of Financial Regulation
Consumer Services 
89 Main Street, Montpelier, VT 05620 - 3101

833-DFR-HOTLINE (toll free)
833-337-4685 (toll free)

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