The Proposal That Could Keep Medical Debt From Trashing Your Credit Score

The 43 million Americans estimated to have medical debt on their credit reports could find some credit score relief should a new Senate bill come to pass.

Five senators —Jeff Merkley (D-Ore.),  Dick Durbin (D-Ill.), Richard Blumenthal (D-Conn.), Bob Menendez (D-N.J.), and Chuck Schumer (D-N.Y.) — introduced legislation late last week that would remove paid-off and settled medical debts from people’s credit reports.

The bill, called the Medical Debt Relief Act, also would require the three major credit reporting agencies to honor the consumer protections they agreed to as part of a settlement with New York Attorney General Eric T. Schneiderman in early 2015. This settlement, among other things, stipulated that Equifax, Experian and TransUnion institute a 180-day waiting period before medical debt gets added to a consumer’s credit report.

Rep. John Carney (D-Dele.) has introduced the bill in the U.S. House of Representatives.

The Deal With Medical Debts

While collections accounts and outstanding bills have long been incorporated into credit reporting, there have been been efforts in recent years to get the credit industry to treat medical debts differently, largely due to the fact that consumers often incur medical bills through no fault of their own.

“Medical debt should not be lumped into the same category as credit card debt and purchases consumers willingly make,” Blumenthal said in a press release announcing the proposed legislation. “This practice has long legs, even after debts are paid, preventing consumers from buying a home or a vehicle and limiting financial opportunities.”

Back in 2014, the Consumer Financial Protection Bureau also found that medical debt unduly penalizes consumers’ credit scores and cited several issues with the medical debt collection process, including consumer confusion about when they would be charged for services, a lack of standard practices regarding when medical debts got resold and the routine practice of “parking” medical debts on credit reports in an effort to get people to pay them.

Getting Relief

Since then, the credit industry has taken some steps to provide relief. The latest version of the popular FICO score and VantageScore, for instance, exclude paid medical debts from their calculations.

Still, until larger initiatives take, consumers should keep an eye on their credit report for any medical debts they may not be aware of, since they can still damage your credit. (You can do so by pulling your credit reports for free each year at and viewing your credit scores for free each month on Be sure to check these reports for accuracy and dispute any errors you may find. (You can go here to learn more about disputing items on your credit reports.)