If you or someone you know has medical debt, here is some major news about credit reporting that could affect your credit score in the very near future. The three major credit reporting agencies recently announced that they will strip 70% of medical debt information out of consumers’ credit reports, starting July 2022.
The three bureaus — Equifax, TransUnion and Experian — say that medical collection debt will no longer appear on credit reports if that debt has already been paid.
According to the Kaiser Family Foundation, two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need.
So, How Do Credit Scores Work?
According to Experian, your payment history is the most important ingredient in credit scoring, and even one missed payment can have a negative impact on your score. The second most important part of your credit score is the amounts owed. In particular your credit usage, particularly as represented by your credit utilization ratio. The credit utilization ratio is the amount of revolving credit you're currently using divided by the total amount of revolving credit you have available.
What do you think of this news? Do you think it will help improve your credit score?
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Disclaimer: Please note that this article is only for educational and informational purposes. Please do your research and consult a trusted professional whenever making decisions.