Three of the largest credit firms are set to change their reporting process this summer.
This could free millions of people from debt.
How will my credit report be impacted?
Even though millions of Americans have health insurance, medical bills can pile up fast and be debilitating. The three largest credit-reporting firms, Equifax, Experian, and TransUnion, all announced that in July medical collections debt will not be included on consumer credit reports. Read more about it here.
This new rule will essentially erase 70% of consumers’ medical debt information from their credit reports.
You will also have a full year before your unpaid collections debt appears on your consumer report. It was previously only six months.
The extension was designed to give consumers more time to work with their insurance or healthcare providers to address their debt before it is reported.
How will this help me?
Beginning in 2023, Equifax, Experian, and TransUnion will not include medical collection debt under $500 on credit reports.
The Consumer Financial Protection Bureau (CFPB) has been calling on companies to change how they report. It is reported by the CFPB that Americans have between $81billion and $140billion in medical debt.
The US Census found that 19% of households can’t afford their medical bills. Roughly 1 in 10 Americans, about 23million people, have medical debt starting at $250.
Medical debts can stay on your credit report for up to seven years. The debt stays on the report regardless if you’ve paid it or even changed states.
Once your debt gets taken to collections, your credit score is heavily impacted.
The change is meant to allow Americans to focus on their recovery instead of bills.
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