Starting in the first half of 2023, Equifax, Experian, and TransUnion will no longer include medical debt in collections under $500 on credit reports.
Millions of Americans are battling an estimated $88 billion in medical debt, according to a report published by the Consumer Financial Protection Bureau. Millions of Americans were granted a relief package when all three credit bureaus announced they will be removing medical debt from consumers' credit reports.
This means that if you've paid your medical bill in full and the debt is still sitting on your credit report as a negative mark, this negative mark will now be removed. It's part of a larger effort by the Biden administration to decrease or eliminate medical debt as a part of government lending decisions.
These debts have had significant long-term financial consequences on consumers as these paid debts that were sent to collections remained as a red mark on their reports, leaving them with fewer options for housing, loans, and credit cards. Recently, studies show that medical debts can roll over into further medical issues such as stress and high blood pressure — leading to even more medical debt being reported on a consumer's credit report.
If you can recall, these changes became effective on July 1, 2022:
- Paid medical debt that was in collections will no longer be included on consumer credit reports.
- You'll have more time before the unpaid medical debt is reported on your credit report: Unpaid medical debt that is currently in collections for one year will be reported on credit reports. This is an increase from six months that was enacted in 2017.
Good news for everyone who has unpaid medical debt. During the first half of 2023, Equifax, Experian, and TransUnion will no longer include medical debt in collections under $500 on credit reports. In a recent Healthcare.com survey, all living generations said their medical debt has negatively impacted their credit scores, with millennials being the highest at 52%. The survey showed one in four Gen Zers and Millennials with medical debt skipped rent or mortgage payments because of their debt. Everyone knows being late on your mortgage payment can negatively impact your credit score.
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