Many Medical Debts Will Be Removed from Credit Reports
Many Medical Debts Will Be Removed from Credit Reports
By: Stacey Nickens
If medical debt is impacting your credit score and report, you may benefit from some upcoming changes to consumer credit reports. Beginning this summer, Equifax, Experian, and TransUnion will be making significant changes to the ways medical debt is reported on credit reports. These changes will remove nearly 70% of medical debt from consumer credit reports.
Beginning in July, medical debt that was paid after being sent to collections will no longer be included on credit reports. In the past, medical debt that was paid after it was sent to collections could still impact your credit report for up to seven years.
Additionally, new unpaid medical debt will not be added to credit reports until a year after being sent to collections. During the first half of 2023, the credit reporting agencies will also remove medical debts of less than $500 from credit reports.
These changes could significantly improve the credit of many Americans. Medical debt is a burden faced by many families, a burden that has been augmented by the ongoing COVID-19 crisis. Even though medical debt is less predictive of a person’s ability to repay other loans, medical debt can still impact your ability to apply for affordable mortgages, car loans, and other credit. The Consumer Financial Protection Bureau (CFPB) says that over $88 billion in medical debt currently impacts 43 million credit reports.
In recent years, the CFPB has worked to hold the credit agencies accountable for taking action against erroneously-reported medical debts and other credit-reporting errors. Beyond pushing for the above changes, the CFPB is also investigating the ways the credit agencies respond to consumer disputes.
The credit agencies have made other changes to credit reporting in recent years. Beginning in 2015, the agencies had to remove debt paid by insurance companies. They have also removed information related to unpaid library fines, traffic tickets, and gym memberships. More recently, tax-lien and civil-judgement data was removed from credit reports.
These changes could improve your credit report and score. You can also take additional steps to improve your credit score, such as reducing your credit utilization ratio or building out your credit file. Finally, you can set up a financial planning meeting with one of our team members for further assistance in improving your credit.
