3 Facts About Dropping Medical Debt From Credit Reports on July 1
According to the Consumer Financial Protection Bureau, more than 43 million Americans owe an estimated $88 billion in medical debt. In the second quarter of 2021, 58% of all bills in collections were medical bills. Once medical bills are sent to collection agencies, individuals’ credit scores suffer. As a result, those affected encounter challenges finding employment and housing. In addition, they may face bankruptcy…just because they were sick.
In order to alleviate this problem, Experian, Equifax, and TransUnion announced that they will remove approximately 70% of medical collection debt from consumer reports starting July 1. Below are 3 Facts About Dropping Medical Debt from Credit Reports on July 1st that you should know.
1. All paid medical collection debt will no longer appear on credit reports
- Currently, medical debt can stay on your credit report for up to seven years.
2. Unpaid medical collection debt won’t begin to appear on credit reports until one year has passed.
- Today, consumers have 180-days to resolve medical debt before it appears on credit reports.
3. Unpaid medical collection debt of $500 or less will no longer appear on credit reports.
- Starts the first half of 2023.
Why Is This Important?
The bottom line is that millions of Americans could see their credit scores increase dramatically in a short period of time. For example, if someone has multiple medical collections on their credit report but otherwise has a clean credit history, it is possible that their credit score increases by 100 points. As a result, they would qualify for a lower interest rate when buying a car or be approved for an apartment that had been out of reach.