Good news for American consumers seeking to purchase homes and establish credit! Fact: the Consumer Financial Protection Bureau reports that roughly 20% of U.S. households have medical debt. Starting in the first half of 2023, the credit bureaus won't include unpaid medical debts under $500.
CFPB found that medical collections accounts appear on 43 million credit reports.
Research found that the presence of medical debt in collections on a credit report is a less predictive indicator of a person’s credit risk.
The credit bureaus say are now acting to help pandemic-weary consumers focus on their health and recovery.
The CFPB plans to do more research on how current medical billing, collections and credit reporting affect patients and their families.
The agency said it will consider whether data on unpaid medical bills should be included in credit reports at all.
Equifax, Experian and TransUnion expected to remove nearly 70% of medical collection debt from credit reports.
Medical debt can be a huge burden for many Americans, affecting their credit scores and making it harder to get credit, rent a home or find employment. But some good news has arrived - Equifax, Experian and TransUnion have announced that they expect to remove nearly 70% of medical collection debt from consumers’ credit reports.
This means that if you paid off your medical debt that was sent to collections, it should be removed from your credit report, giving you some relief.
Unpaid medical debts won't be added to credit reports.
In addition, unpaid medical debts won't be added to credit reports for a year after being sent to collections, providing people with more time to work with healthcare providers to settle disputes or arrange a repayment plan.
While medical debt remains a significant issue for many Americans, these changes by the credit bureaus provide some hope and relief. It's worth paying down medical debt if you can or seeking help with payment plans or financial assistance if you're struggling.
Many Americans are plagued by medical debt.
When medical debt ends up in collections, the consequences can be serious. Medical bills that show up in credit reports can make it harder to get credit, buy or rent a home or find employment. As of the second quarter of 2021, 58% of bills in collections were for medical debt, according to the CFPB, whose research showed $88 billion in medical debt on consumer credit records.
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