The nation's largest credit reporting agencies announced Friday that a large number of U.S. consumers will have their medical debt wiped from their credit reports.
After conducting months of market research, the three credit reporting agencies said they would remove 70% of medical collection debt accounts from consumer credit reports. The changes will begin this summer.
After two years of the COVID-19 pandemic and a detailed review of the prevalence of medical collection debt on credit reports, the NCRAs are making changes to help people focus on their personal wellbeing and recovery.
Medical debts that were sent to debt collectors and eventually paid off will no longer be included on consumer credit reports. Credit reports used to include debts that were paid after being sent to collections for seven years. Consumers will have a year before medical collection debt appears on their credit reports. The agencies said that people will have more time to work with their insurance or health-care providers.
In the first half of the 20th century, medical debts that are less than $500 will no longer be included on credit reports.
Medical debt can cause even the most fiscally rigorous Americans to end up missing payments, which can result in lower credit scores that will hinder their ability to get the best credit or loan rates.
There is an estimated $88 billion in medical debt on consumer credit records as of June 2021, according to a February report by the Consumer Financial Protection Bureau. The majority of medical debts on consumer credit reports are under $500.
Black and Hispanic consumers, young adults and low-income individuals are more likely to have medical debt than the national average according to a report. Older adults and veterans are affected by the debt.
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