Lenders use credit reports to determine if a person is a good candidate.
Photo: ASIF HASSAN / AFP / Getty Images
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Medical bills have become a headache for thousands of Americans and a source of financial problems – in the country alone represents the largest source of personal debtaccording to data from the Office for Consumer Financial Protection.
But these problems could be in the past after lThe three main agencies of credit reports announced that they plan to eliminate most medical debt on consumer reports beginning this summer.
Equifax, Experian and TransUnion said Friday that they are making a number of changes to the way medical debt is handled on credit reportswhich forms part of a consumer’s record of loans and payments.
These joint measures eliminate nearly 70% of commercial lines of medical collection debt of consumer credit reports, a step taken after months of industry research.
lenders use credit reports to determine if a consumer is a good candidate for a loan, which means a low score could make it harder to get a mortgage, car loan, or rent an apartment.
Here’s what’s included in the announced changes to how they handle medical debt:
–Will eliminate medical collection debt under $500 of credit reports as of the first half of 2023
-The period of time before unpaid medical debts in collections appear on a credit report will increase from 6 months to 1 year
-As of July 1, 2022, lPaid medical collection debt will be removed from credit reports of consumers
Mark W. Begor, CEO of Equifax; Brian Cassin, CEO of Experian; and Chris Cartwright, executive director of TransUnion gave a joint statement on the matter:
“Medical collection debt often arises from unforeseen medical circumstances. These changes are another step we are taking together to help people in the United States focus on their financial and personal well-being“, said
“As an industry, we remain committed to helping drive fair and affordable access to credit for all consumers,” they added.
The announcement occurs when the Federal regulators and consumer advocates The issue of medical debt is being increasingly scrutinized, and the Consumer Financial Protection Bureau earlier this month criticized the nation’s medical billing system for failing consumers.
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