Medical debt can affect your credit score in California — but recent changes to federal and state law have significantly reduced its impact. Paid medical collections no longer appear on credit reports. Medical debt under $500 has been removed from reports entirely. And unpaid medical debt over $500 cannot appear on your report until at least one year after it was referred to collections. These changes do not eliminate the problem — unpaid medical debt over $500 can still damage your credit — but they give you more time to resolve the bill before your credit takes a hit. And if medical debt is being reported inaccurately, you have the right to dispute it.
What the Major Credit Bureaus Changed
In 2022 and 2023, Equifax, Experian, and TransUnion made significant changes to how medical debt is reported. As of July 2022, paid medical collection accounts were removed from credit reports entirely. As of April 2023, medical collection accounts under $500 were removed regardless of payment status. And unpaid medical debt over $500 now carries a one-year grace period before it can appear on your report — giving you time to resolve billing disputes, apply for financial assistance, or negotiate a settlement before your credit is affected.
These changes were voluntary on the part of the bureaus, not legally mandated at the federal level — though the CFPB has proposed rules that would remove medical debt from credit reports entirely. The current rules are subject to change.
What Can Still Appear on Your Credit Report
Despite these changes, unpaid medical debt over $500 that has been in collections for more than one year can still appear on your credit report and damage your score. A medical collection account is a serious negative entry — similar in impact to other collection accounts — and can remain on your report for up to seven years from the date of first delinquency under the Fair Credit Reporting Act, 15 U.S.C. § 1681c.
Your Right to Dispute Inaccurate Medical Debt
If a medical debt is being reported inaccurately — wrong amount, wrong creditor, account that should have been paid by insurance, debt that is too old to report, or an account that does not belong to you — you have the right to dispute it directly with the credit bureau under the Fair Credit Reporting Act, 15 U.S.C. § 1681i. The bureau must investigate within 30 days and correct or remove inaccurate information. If the furnisher — the collector or medical provider — cannot verify the information, it must be removed.
Send disputes in writing by certified mail. Include copies — not originals — of any supporting documentation. Keep records of everything.
California’s Additional Protections
California has enacted additional protections for consumers dealing with medical debt and credit reporting. Under California Civil Code § 1785.25, a person may not furnish information to a credit reporting agency that they know or should know is inaccurate. Furnishing false information is actionable under both the FCRA and California’s Consumer Credit Reporting Agencies Act, Civil Code § 1785 et seq. California also prohibits creditors from reporting medical debt to consumer credit reporting agencies while a patient’s application for financial assistance is pending — giving additional protection to consumers who are actively seeking charity care.
The Relationship Between Medical Debt and a Lawsuit
A medical debt appearing on your credit report and a lawsuit filed to collect that debt are separate events. A collector can report the debt and sue you at the same time. If you are served with a lawsuit, you must respond regardless of what is happening with your credit report.
Learn how to respond to a debt collection lawsuit in California →
Frequently Asked Questions
Does medical debt under $500 affect my credit score?
No. As of April 2023, the three major credit bureaus removed all medical collection accounts under $500 from consumer credit reports. This applies regardless of whether the debt is paid or unpaid.
How long does medical debt stay on my credit report?
A medical collection account can remain on your credit report for up to seven years from the date of first delinquency under 15 U.S.C. § 1681c. However, paid medical collections are no longer reported, and unpaid medical debt under $500 has been removed entirely. Unpaid medical debt over $500 carries a one-year grace period before it can appear.
Can I dispute a medical debt on my credit report if insurance should have paid it?
Yes. If a debt was the responsibility of your insurer and was reported to the credit bureaus in error, dispute it with the bureau and provide documentation — your explanation of benefits, insurance correspondence, or any insurer acknowledgment of the claim. The bureau must investigate and correct inaccurate information under 15 U.S.C. § 1681i.
What is a pay-for-delete agreement and does it work for medical debt?
A pay-for-delete agreement is a negotiated arrangement where a collector agrees to remove a collection account from your credit report in exchange for payment. The major credit bureaus discourage this practice and collectors are not required to agree to it. However, it is not illegal, and some collectors will agree — particularly debt buyers. Get any such agreement in writing before paying.
Can a hospital report medical debt to the credit bureaus while I am applying for charity care?
No. California law prohibits reporting medical debt to a credit reporting agency while a financial assistance application is pending. If a hospital has reported your debt while your charity care application was under review, dispute the entry with the bureau and file a complaint with the DFPI.
Legal references: 15 U.S.C. § 1681c (FCRA); 15 U.S.C. § 1681i (FCRA dispute rights); California Civil Code §§ 1785 et seq., 1785.25 (Consumer Credit Reporting Agencies Act); California Health and Safety Code § 127400 et seq.