Some degree of medical debt relief is in sight, however, as the three biggest credit reporting companies will soon start removing tens of billions of dollars of medical debt from consumers’ credit reports — lessening difficulties to borrow and aiding the credit scores of millions of Americans, according to The Wall Street Journal.
Equifax, Experian, and TransUnion are set to change how medical debt is reported. The first changes are scheduled to take effect in July and are expected to eliminate nearly 70% of medical debt in collections accounts from credit reports.
The credit reporting companies will remove from credit reports medical debt that was paid after it was sent to collections. Under the current procedures, such debts can weigh on a credit rating for up to seven years, even if they’re already paid.
Under the new approach, new unpaid medical debt won’t be added to credit reports for a full year after being sent to collections. Additionally, the three credit monitoring agencies will be removing any unpaid medical debts of less than $500 in the first half of next year, with the potential for that threshold to rise, The Wall Street Journal reported.
Because medical bills are expensive and often stem from unplanned circumstances, medical debt is the most common type of debt reported on consumer credit records in the U.S. As stated in a report on the medical debt burden in the United States — a report published by the Consumer Financial Protection Bureau and released on March 1 — those contacted by collection agencies are contacted regarding medical debt more often than any other type of debt.
This move by Equifax, Experian and TransUnion may have a real impact on those struggling with past medical debt and a subsequent poor credit rating by summer’s end.
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