Millions of Americans have racked up big medical bills, running up debts they are struggling to pay. Now, they don’t have to worry as much about the impact of those unpaid obligations on their credit score.
The big three credit reporting companies – Equifax, Experian and TransUnion – announced on Friday that they would remove nearly 70% of commercial medical debt collection lines from consumer credit reports. (A trade line is an individual account that appears on your credit report.)
The new policy is due to take effect July 1. It includes two major changes:
- Paid medical collection debt will no longer appear on consumer credit reports.
- Those with unpaid medical collection debt will have a full year before that type of debt appears on their credit report. The previous standard was six months, but the change will give debtors more time to work with creditors to find solutions to their debt problems.
Additionally, in the first half of 2023, credit reporting companies will stop including medical collection debts below at least $500 in credit reports.
In a joint statement announcing the changes, the three credit reporting companies pointed out that medical collection debt is often the result of “unforeseen medical circumstances” and that they believe the changes will help promote “equitable and affordable credit for all consumers”. ”
In the announcement, the companies point to data from the Kaiser Family Foundation which reveals that two-thirds of all medical debt results from a single event or short-term medical expense incurred when an acute medical need arises.
To learn more about improving your financial profile, check out “7 Ways to Boost Your Credit Score Fast.”
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