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Billions in medical debt to be wiped from credit reports

Americans have over $88 billion in medical debt listed in consumer credit filings. according to to the tax office for consumers. Most of the time, the debt was accumulated through no fault of your own – through accidents or the misfortune to fall ill. But even after the person is healed, the unpaid debt on credit reports follows them and affects their life for years.

But now the big three credit agencies are bringing relief to many of those who have unpaid medical debt plaguing their credit records, reports CNN. All three major credit bureaus — Equifax, Experian, and TransUnion — have announced that they will eliminate nearly 70% of medical debt from unpaid bills on credit reports. While the change won’t eliminate an individual’s debt, it will help improve a person’s credit score so that the misfortune of getting sick won’t affect their ability to rent an apartment or get a car loan, for example.

The changes to how medical debt is reported on credit reports include:

  • Effective July 1, 2022, paid medical debt sent for collection will no longer appear on credit reports. Previously, this debt stayed on credit reports for up to seven years.
  • It now takes a year for unpaid medical debt to show up on a credit report, instead of the current six-month time frame.
  • Beginning in the first half of 2023, medical debt under $500 will no longer appear on credit reports.

In announcing the move, the companies said: “Medical collection debt often arises from unforeseen medical circumstances. These changes are another step we are taking together to help people across the United States focus on their financial and personal wellbeing.”

https://www.fastcompany.com/90733310/the-3-ways-billions-in-medical-debt-is-set-to-be-wiped-from-credit-reports?partner=feedburner&utm_source=feedburner&utm_medium=feed&utm_campaign=feedburner+fastcompany&utm_content=feedburner Billions in medical debt to be wiped from credit reports

JACLYN DIAZ

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