A healthcare worker walks past a row of ambulances parked outside Houston Methodist Hospital amid the global outbreak of coronavirus disease (COVID-19). in Houston, Texas, USA on June 22, 2020
Callaghan O’Hare | Reuters
Major national credit reporting agencies announced on Friday that a large number of US consumers will have their medical debts erased from their credit reports.
Equifax, Experian and TransUnion said in a joint statement that they will remove nearly 70% of medical bills from consumer credit reports after several months of market research. Changes will begin to take place this summer.
“After two years of the COVID-19 pandemic and a detailed analysis of the prevalence of medical claims on credit reports, the NCRA (nationwide credit reporting agencies) are making changes to help people focus on their personal well-being and recovery,” the post reads. the companies said.
Effective July 1, medical debts that have been sent to collections and eventually paid off will no longer be included in consumer credit reports. In the past, debts that were paid off after being sent to collections could be included in credit reports for up to seven years. Consumers will also now have a year before unpaid medical bill collection debt shows up on credit reports after being sent to collections. That’s up from the current six months, which the agencies say will give people more time to work with their insurance or healthcare providers.
Beginning in the first half of 2023, Equifax, Experian, and TransUnion will also stop including medical bills below $500 in their credit reports.
Medical debt, which can be extremely unpredictable, can cause even the most financially strict Americans to end up missing payments, which can lead to lower credit scores preventing them from getting better loans or loan rates.
As of June 2021, medical consumer debt is $88 billion, according to a February report from the Consumer Financial Protection Bureau. The majority of medical debts collectible on consumer credit reports are less than $500, he added.
The report says black and Hispanic consumers, young adults and low-income people are more likely to have medical debt than the national average. The elderly and veterans have also been “hit hard” by the debt, he said.