According to research from the Consumer Financial Protection Bureau, there was $88 billion in medical debt on consumers’ credit reports as of last June. COVID-19 didn’t help.
Read on to find out what consumers should know about changes to how medical debt collection debt is reported.
MODIFICATIONS TO THE DECLARATION OF DEBTS PAID
Equifax, Experian and TransUnion have announced changes to medical debt collection reporting — starting this summer, when the bureaus announce they will change how they handle paid medical debt collection debt.
“Currently, once medical debts are paid, they still appear on your report for a while, but that will change in July. Once you have a medical debt that has been paid off, starting in July, it will come out of your credit report,” explained Sara Rathner of NerdWallet.
MORE TIME FOR CONSUMERS
In another change, consumers will also have up to a year to work with insurance or healthcare providers to pay off medical debt before the unpaid debt is flagged on their credit report.
“You might be able to lower the cost of your bill and that takes time. This gives you more time to figure out what you really need. It could be less, much less than you were originally charged,” Rathner said.
DEBTS LESS THAN $500
In the first half of next year, the credit bureaus say medical debt under $500 will not be included in credit reports.
“If you want to apply for a mortgage in the future, if you think you may need to replace your car, and if you need to apply for financing, these are all things that can be affected by the information on your credit report. “, Rathner said. . “It’s really unfair to have negative information on your credit report just because you got sick or injured yourself.”
In a joint statement, the CEOs of Equifax, Experian and TransUnion said, “Medical collection debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal well-being. As an industry, we remain committed to helping foster fair and affordable access to credit for all consumers. »
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