STARTS July 1, millions of Americans will have their medical debt removed from their credit reports.
In addition, three companies: Equifax, Experian and TransUnion, also decided to increase the fee collection period from six months to one year.
This includes all unpaid medical services debt in collections that have been credit-reported for less than a year.
Usually, that debt can be kept on file for seven years.
This will give consumers plenty of time to work with insurance and/or healthcare providers to settle their debt before it is reported on their credit file.
Mark W. Begor, CEO of Equifax; Brian Cassin, CEO of Experian; and Chris Cartwright, CEO of TransUnion, speak: “Unexpected costs, such as unplanned medical expenses, can be a pain for many families.”
“These changes will redesign our approach to medical debt collection reporting in a way designed to help consumers focus on their personal health,” they added. .
Who will be affected?
Effective immediately, millions of Americans will benefit from these changes.
As noted above, the list includes:
- All medical claims that have been paid in full will no longer be included on your credit report
- The amount of time before unpaid medical claims will appear on your reports will increase from six months to one year
- In the first half of 2023, any medical debt under $500 will no longer appear on the credit report
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 more than two years after the pandemic, with the Consumer Financial Protection Bureau (CFPB) urging companies to change the way they report.
The CFPB Report that Americans have a medical debt of between $81 billion and $140 billion.
The CFPB also revealed that medical collections were found on 43 million credit reports.
A study by US Census Bureau found that 19% of households are unable to pay their medical bills.
In addition, nearly 1 in 10 Americans, with about 23 million people, are facing medical debt starting at $250 according to a study by Kaiser Family Foundation.
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