FROM July 1, millions of Americans will have their medical debt removed from their credit reports.
The amendments state that any medical debt owed by the consumer in full will no longer be included in U.S. consumer credit reports.
In addition, the three companies: Equifax, Experian and TransUnion, have also decided to increase the collection period from six months to one year.
This includes all unpaid medical debt in collections that have been on credit reports for less than a year.
Usually that debt can remain on your record for seven years.
This will give consumers plenty of time to work with insurance and / or healthcare professionals to resolve their debt before it is reported on the credit file.
Mark W. Begor, CEO of Equifax; Brian Cassin, CEO of Experian; and Chris Cartwright, CEO of TransUnion, said: “Unexpected expenses, such as the cost of an unplanned doctor’s visit, can be a difficulty for many families.”
“These changes will align our approach to medical debt collection reporting in a way designed to help consumers focus on their personal well-being,” they added.
Who will be affected?
With immediate effect, millions of Americans will benefit from these changes.
As mentioned above, the list includes:
- All medical debt collection that has been paid in full will no longer be included in your credit report
- The time period before unpaid medical debt collection appears on your report will increase from six months to one year
- In the first half of 2023, any medical debt under $ 500 will no longer appear on credit reports
Earlier this year, the companies said in a joint statement that these changes will effectively remove 70% of consumers’ medical debt information from their credit reports.
This comes as over two years into the pandemic, the Consumer Financial Protection Bureau (CFPB) has urged companies to change the way they report.
The CFPB reports that Americans have anywhere between $ 81 billion and $ 140 billion in medical debt.
The CFPB also revealed that medical collections were found on 43 million credit reports.
A study by the US Census Bureau found that 19% of households can not afford medical bills.
In addition, nearly 1 in 10 Americans, approximately 23 million people, face medical debt starting at $ 250, according to a study by the Kaiser Family Foundation.
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