Americans have over $88 billion of medical debt listed on consumer credit records, according to the Consumer Financial Protection Bureau (CFPB). Most of the time, the debt was racked up through no fault of their own–due to accidents or having the misfortune of falling ill. But even after the person heals, the unpaid debt follows them around on credit reports, impacting their life for years.
But now the three major credit agencies are bringing relief to many of those who have unpaid medical debt haunting their credit records, reports CNN. All three major credit bureaus–Equifax, Experian, and TransUnion–have announced they will remove almost 70% of medical debt from unpaid bills from credit reports. While the change won’t eliminate the debt owed by the individual, it will help improve a person’s credit score so the misfortune of getting sick doesn’t impact their ability to, say, rent an apartment or get a car loan.
The changes to the medical debt reporting on credit reports will include:
- From July 1, 2022, paid medical debt that had been sent to collection will no longer be included on credit reports. Previously this debt remained on credit reports for up to seven years.
- Unpaid medical debt will now take one year to show on a credit report instead of the current six months time frame.
- Beginning the first half of 2023, medical debt of under $500 will no longer show on credit reports.
Announcing the move, the companies said, “Medical collections debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal well-being.”
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