Most Medical Debt Will Soon Disappear from Credit Reports
Good news for people with medical debt: the major credit-reporting agencies will soon remove nearly 70% of medical collection debt from credit reports.
Equifax, Experian and TransUnion outlined three changes that are slated to eliminate more than $60 billion of debt:
- Reports will no longer include paid medical collection debt starting July 1.
- People will have 12 months to settle medical bills before collection debt shows up on credit reports.
- In 2023, all reporting of medical collection debt under $500 will be eliminated.
Removing all medical collection debt under $500 is significant. Recent data from the Consumer Financial Protection Bureau (CFPB) shows that 62% of medical collections are under $490.
The agencies cited the COVID-19 pandemic and the prevalence of medical collection debt on credit reports as reasons for the changes, and saying the new policies will help Americans “focus on their personal wellbeing and recovery.”
But Axios reported that the CFPB has also been applying pressure to the credit bureaus, particularly regarding credit reporting and inaccurate medical debts.