Medical Collections and Mortgage Approval in 2026: What Changed and What Still Applies

Medical collections have historically been the single most common reason for credit score gaps among mortgage borrowers. The policy landscape changed dramatically beginning in 2022, and MLOs working with 2026 files need to understand what the current rules actually are rather than assuming the old framework still applies.

What Changed Under NCAP

• ✦Equifax, Experian, and TransUnion removed all medical collections under $500 from credit reports effective July 2022
• ✦Medical collections less than 12 months old were removed from credit reports
• ✦Collections paid before reporting were removed across all categories
• ✦The CFPB finalized a rule in January 2025 to remove remaining medical debt from credit reports; monitor the enforcement status under the current regulatory environment

Agency Treatment of Remaining Medical Collections

Fannie Mae and Freddie Mac do not require medical collections to be paid off as a condition of loan approval. Active disputes on medical collection accounts are explicitly excluded from the credit dispute policy that blocks AUS approval. FHA excludes medical collections from the $1,000 cumulative unpaid collections threshold that would otherwise require resolution. VA follows a similar approach; medical collections generally do not block approval.

USDA and the More Conservative Standard

USDA Rural Development guidelines are more conservative. Outstanding collections including medical may require review and potential resolution depending on the file. USDA guaranteed loans are reviewed on a case-by-case basis; check with the lender's USDA underwriting team rather than assuming the same treatment as conventional or FHA.

Score Impact in 2026

Even where a medical collection still appears, the score suppression is generally less severe than non-medical collections. The FICO versions used in mortgage (FICO 2, 4, and 5) still weight them, but the reduction in reporting means fewer files are affected. The transition to FICO 10T and VantageScore 4.0, which weight medical collections even less, is ongoing under the GSE bi-merge transition framework.