How does medical debt affect your credit report, and what recent changes in law and reporting standards should consumers and data furnishers be aware of?
Medical debt is a unique and often misunderstood component of consumer credit reporting. With evolving state and federal regulations, as well as industry best practices, understanding how medical debt is reported—and how it impacts your credit—is essential for both consumers and data furnishers.
Definitions and Context
Medical debt refers to unpaid bills for healthcare services, such as hospital stays, doctor visits, or procedures. Unlike other types of debt, medical debt is often incurred unexpectedly and can be subject to special protections under the law. The Fair Credit Reporting Act (FCRA), Metro 2® guidelines, and recent state laws all influence how medical debt appears on credit reports.
Step-by-Step Reporting Standards
1. Reporting Medical Debt
- Minimum Reporting Thresholds: As of recent years, the major credit bureaus and Metro 2® guidelines require that medical debt collections under $500 are not reported.
- Waiting Period: Medical debt cannot be reported to credit bureaus until it is at least 365 days past the original date of delinquency, giving consumers time to resolve insurance or billing issues.
- Creditor Classification: When reporting medical collections, furnishers must use Creditor Classification Code 02 (Medical/Health Care) in the Metro 2® K1 Segment.
2. State Law Changes
- State Restrictions: Several states—including Colorado, New York, California, Illinois, Rhode Island, Vermont, Washington, Delaware, Maine, Maryland, Minnesota, Oregon, Connecticut, and Virginia—have enacted laws that restrict or prohibit the display of medical debt on credit reports for residents. As of late 2025, Experian and other bureaus have implemented these changes, removing identifiable medical debt for affected consumers.
- Ongoing Updates: Data furnishers must stay informed about state-specific requirements and ensure their reporting logic is updated accordingly.
3. Disputing Medical Debt
- Consumer Rights: Consumers can dispute medical debt they believe is inaccurate, not owed, or already paid by insurance. The FCRA requires prompt investigation and correction.
- Metro 2® Codes: Use appropriate dispute codes (e.g., XB for “account in dispute”) during the investigation process.
Compliance Requirements
- FCRA: Requires accurate, timely, and fair reporting of all debts, including medical collections. Data furnishers must not report medical debt that does not meet the minimum age or amount thresholds.
- Metro 2®: Mandates the use of specific codes and fields for medical debt, including the correct creditor classification and waiting periods.
- State Laws: Data furnishers must comply with all applicable state laws regarding the reporting and display of medical debt.
Impact on Consumers
- Credit Scores: Medical debt can negatively impact credit scores, but recent changes have reduced this effect, especially for small balances and debts in states with new protections.
- Access to Credit: Removing or suppressing medical debt from credit reports can improve consumer access to loans, mortgages, and other financial products.
- Dispute Resolution: Consumers have enhanced rights to dispute and resolve medical debt, reducing the risk of long-term credit harm from billing errors or insurance delays.
Conclusion
The landscape for medical debt reporting is rapidly changing. Consumers benefit from new protections and clearer dispute processes, while data furnishers must remain vigilant in updating their practices to comply with FCRA, Metro 2®, and state laws. Accurate, compliant reporting of medical debt supports fair credit access and reduces unnecessary financial hardship.