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The In’s and Out’s of Medical Debt

What is Considered Medical Debt

With there being more than 45 different FICO scores in circulation there is bound to be some variances in how each score is reported. Each debt listed on a report holds different weight; from revolving debt to past due debt, each instance is judged differently across each scoring model when determining risk. With the emergence of the Covid 19 pandemic, many consumers have experienced a new type of debt over the past year, unpaid medical debt.

It is rare for a medical debt to appear on your report listed under your practitioners’ company or service provider. You will primarily see your medical debt appear on your report as a collection under a third parties’ agency.

Medical collections is one of the more daunting debts held by a consumer as they do not willingly place themselves in the situation unlike opening a tradeline with a credit card provider or loan officer. The dilemma sits with the morality behind paying off the debt. Medical service provides are entitled to payment for their services like any other provider. On the other hand, no one chooses to fall ill or succumb to injury. Regardless of the situation, there have been many changes made by the credit reporting and scoring communities to attempt to pad and reduce the impact of medical debt to the consumer.

Are you unsure what is on your report? You’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies but monitoring your credit on a regular basis is the best way to help protect your score! Sites like Credit Armor allow consumers to monitor all three bureau reports with monthly pulls, track how your credit score changes over each month, and provides helpful identity theft protection tools like fraud insurance!



In March of 2015, the three credit reporting companies (Trans Union, Equifax and Experian) established a plan to provide more accurate and accessible information. The National Consumer Assistance Plan was set to help consumers better understand and correct errors found on their reports as to bolster their credit portfolio. This plan adjusted common practices in many beneficial ways:

1- Consumers who acquire their annual credit report and dispute information that causes the report to change will receive an additional free credit report after updates have been made.

2- The reporting time for medical debts has been changed to report after 180 days to allow insurance to be applied. Credit reporting agencies will also be removed from the reports that previously listed medical collections if they have been paid or are being paid by insurance. If the debt is reported by a debt collector, the account still needs to be noted as being a medical debt as stated by the Fair Credit Reporting Act in Section 623.

3- Traffic tickets, parking tickets or any other debt that didn’t not come from a contract or agreement will not appear on a consumer’s report.

4- Victims of identity theft will receive special attention or those that have another individual’s information listed on their report.

Do you have medical debt on your credit report? Do you have questions about your credit report or credit questions in general? f you would like to speak with one of our attorneys or credit advisors and complete a free consultation please give Credit Law Center a call at 1-800-994-3070 we would be happy to help.


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An Ever-Changing Reporting System

Every few years a new credit scoring model is developed in an attempt to make meaningful changes in how credit report entries are considered. Currently we are acknowledging almost 50 different FICO scores, each assessing different aspects of the consumers debt. VantageScore (another leader in the credit scoring community) has also faced many changes in their scoring model throughout the years when it comes to medial debts. In the past, VantageScore had ignored medical debts that were furnished by the original medical provider. Though the situation was found to be extremely rare, this meant that a medical facilities debt had no impact on any generation of the current VantageScore (1,2,3 and 4).

Now, with the later VantageScore 3.0 and 4.0, all paid collections are ignored and removed from the account. This had provided a more lenient scoring model that has been much more forgiving to consumers who face medical debt. Keep in mind that a medical debt that is paid by insurance is different from an account that is settled. A settled account is not applicable when it comes to removal and only paid collections made by insurance companies will be removed.

The most current and forgiving VantageScore (4.0) is the only scoring model that distinguishes medical collections from other accounts on your report. This means that medical collections are in a realm of their own leaving accounts such as credit cards and auto loans to be reported normally. This is meant to minimize the impact of a medical collection on consumers reports and better differentiate these accounts from all other types of collections.

Article by: Joe Peters


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