How Medical Debt Will Change Your Credit Score in 2025 and What You Need to Know

Unexpected medical bills can cause stress and financial strain. For many, medical debt has also meant damage to credit scores, making it harder to get loans, credit cards, or even housing. The good news is that credit reporting agencies and lenders are changing how they treat medical debt in 2025. These changes aim to reduce the negative impact on millions of people who face medical bills they cannot control.

This post breaks down the major updates to credit reporting and medical collections, explains what they mean for your credit score, and offers practical steps you can take to protect your credit health.

Medical debt and credit score changes in 2025

Illustration showing the connection between medical debt and credit scores with clear financial and medical symbols

What Is Changing with Medical Debt and Credit Scores in 2025

Credit bureaus and lenders are updating their policies to make credit reports fairer for people with medical debt. Here are the key changes:

• Medical collections under $500 will no longer appear on credit reports.

Small medical debts often result from billing errors or minor charges. Removing these helps prevent unnecessary damage to credit scores.

• Paid medical collections will no longer affect credit scores.

If you pay off your medical debt, it will no longer hurt your credit score, even if it was previously reported as a collection.

• Lenders are giving less weight to unpaid medical debt.

Even if you have unpaid medical bills, lenders are now less likely to see this as a major risk factor when deciding on credit.

These updates come after years of advocacy and research showing that medical debt is different from other types of debt. Medical bills often come unexpectedly and are not always within a person’s control.

Why These Changes Matter for You

Medical debt has been one of the leading causes of credit problems in the U.S. Many people with good financial habits found their credit scores damaged by unpaid medical bills. This made it harder to get loans or credit cards, even when they managed other debts responsibly.

By removing small medical collections and forgiving paid ones, credit reports will better reflect your true financial behavior. Lenders will also focus more on other debts that show your creditworthiness.

Millions of people who struggled with medical bills will see their credit scores improve or avoid damage in the first place. This can open doors to better interest rates, housing options, and financial opportunities.

How to Check Your Credit Report for Medical Debt

Even with these changes, it’s important to stay on top of your credit report. Here’s what you should do:

• Get a free credit report from each of the three major bureaus (Equifax, Experian, TransUnion).

You can do this once a year at AnnualCreditReport.com.

• Look for any medical collections listed.

Check if the amounts are under $500 or if they show as paid.

• Verify the balances before making any payments.

Sometimes medical bills are reported incorrectly or include charges you already paid or disputed.

• Dispute any outdated or inaccurate medical collections.

If you find errors, file a dispute with the credit bureau to have them corrected or removed.

• Monitor your credit score regularly.

Use free tools or credit monitoring services to see how your score changes as these reforms take effect.

What to Do If You Have Medical Debt on Your Report

If you find medical debt on your credit report, here are practical steps to take:

1. Confirm the debt is yours and the amount is correct.

   Contact the medical provider or collection agency to verify details.

   
   

2. Pay off debts under $500 if you want to clear them quickly.

   Since these will be removed from reports, paying them can speed up the process.

   
   

1. Pay off larger medical debts if possible.

   Paid medical collections no longer affect your credit score, so clearing them can improve your credit.

   
   

2. Negotiate with providers or collection agencies.

   Sometimes you can arrange payment plans or reduced settlements.

   
   

1. Keep records of all payments and communications.

   This helps if you need to dispute errors later.

   
   

What to Expect as These Changes Roll Out

The new rules are already in progress and will continue to be implemented throughout 2025. Credit bureaus update reports monthly, so changes may take time to appear.

Lenders will also adjust their credit scoring models to reflect the reduced impact of medical debt. This means your credit score might improve gradually as paid collections drop off and small debts disappear.

Stay patient and keep monitoring your credit. If you see errors or outdated information, act quickly to dispute it.

Medical debt has long been a challenge for many Americans. The changes in 2025 offer relief and a fairer way to assess creditworthiness. By understanding these updates and taking control of your credit report, you can protect and improve your financial future.

Take the first step today by checking your credit report and reviewing any medical collections. This simple action can help you avoid surprises and make the most of the new protections in place.