Credit report

Equifax, Inc. (NYSE:EFX), EXPERIAN PLC ADR (EXPGY) – Credit Reporting Companies to Change Treatment of Medical Debt: What You Need to Know

The country’s three major credit reporting companies simultaneously announced plans to rewrite their corporate policies on medical debt reporting.

What happened: According to a the wall street journal report, Equifax Inc. (NYSE: EFX), Experian API (OTC: EXPGY) and Trans Union (NYSE: TRU) will remove medical debts from their reports that have been paid after they are sent to collections and will not add new unpaid medical debts for a full year after they are sent to collection agencies. The changes will take effect in July.

The companies also plan to write off unpaid medical debt under $500 in the first half of 2023, according to an unnamed source cited in the Journal report.

Currently, medical debts can remain on a consumer’s credit file for up to seven years, even if the debts have been fully paid off. With these changes, approximately 70% of medical debt in collection accounts will now be removed from credit reports.

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Why it matters: Medical debt has been an extraordinary financial burden for many Americans, and it was one of the driving forces that fueled the creation and passage of the Affordable Care Act in 2010. This situation has not been mitigated by the passage of this landmark legislation, however, and many consumers with sterling credit histories are seeing their credit ratings tarnished by high levels of medical debt created by emergencies and prolonged illnesses.

According to Consumer Financial Protection Bureau (CFPB), approximately $88 billion in medical debt is placed on 43 million credit reports.

The Journal, citing “people familiar with the matter”, reported that the three companies were responding to the CFPB Director’s increased attention. Rohit Choprawhich has prioritized credit information, particularly in how the three companies respond to companies that misreport medical debt.

“This is an important step to support consumers in the wake of the Covid-19 pandemic,” the companies said in a joint statement. “These changes reflect our continued commitment to making access to fair and affordable credit easier for all consumers.”

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