Medical bills have become a major source of financial trouble for millions of Americans, amounting to the main source of personal debt in the US. Now, the top three credit reporting agencies plan to eliminate most of the medical debt from consumer credit reports starting this summer.
Equifax, Experian and TransUnion said on Friday that they are making a number of changes to the way they handle medical debt on credit reports, which is a record of a consumer’s loan and repayment. Lenders use credit reports to determine if a consumer is a good bet on a loan, which means that a bad credit score can make it difficult to get a mortgage, a car loan, or other products. Credit reports can also affect people’s ability to rent an apartment and even find work.
The announcement comes as federal regulators and consumer advocates are increasingly studying the issue of medical debt, and the Office of Consumer Financial Protection earlier this month criticized the country’s medical billing system for consumers. bankrupt. Medical debt-related mistakes are common in credit reports and consumers often have difficulty resolving issues, the agency said.
According to the CFPB, approximately 1 in 5 households in the United States has debt related to health care.
The top three credit reporting agencies said they are making several changes to the way they handle medical debt. They include:
- Medical debt paid will be withdrawn from consumer credit reports
- The period of time before unpaid medical debts in collections appear on a credit report will increase from 6 months to 1 year
- Credit bureaus will eliminate medical bill debt below $ 500 from credit reports
“Medical billing debt often arises from unforeseen medical circumstances,” said Mark W. Begor, CEO of Equifax; Brian Cassin, CEO of Experian; and Chris Cartwright, CEO of TransUnion, in a joint statement.
The changes will allow “people in the United States to focus on their financial and personal well-being,” they added.
The CFPB, created in the wake of the 2008 financial crisis, oversees credit bureaus. His March 1 report on medical debt warned that he planned to “hold credit reporting agencies accountable” for inaccurate medical debts on consumer reports. The agency also said it planned to determine whether unpaid medical billing data should be included in credit reports.
Americans complain about the three major credit reporting agencies more than any other issue, according to the CFPB’s analysis of complaints. More than 6 out of 10 complaints received by the CFPB in 2021 were related to Equifax, Experian or TransUnion, the agency said.
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