U.S. Credit Reporting Will Undergo Major Overhaul
According to the CNBC report, debts related to medical treatment will soon be removed from your credit report.
It was announced on Friday that Equifax, Experian, and TransUnion support changes to the way medical debt is reported to credit bureaus.
Over 70% of medical collection debt will be removed from consumer credit reports.
Kaiser Family Foundation said:
…two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need.
According to Business Wire:
Effective July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports. In addition, the time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file. In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.
What Do These Changes Mean for Consumers?
In short, if you have medical debt on your credit report, it can be erased, resulting in an increase in your credit score.
A higher credit score can lead to:
- Lower interest rates
- Qualifying for financing (like home mortgage loans or auto loans)
- Paying less for monthly payments on new credit
“Medical collections debt often arises from unforeseen medical These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing.”