Credit report

Medical bills will no longer haunt your credit report

LThis summer, Equifax, Experian and TransUnion will begin removing medical debt from credit reports, dramatically reducing a major borrowing barrier for tens of millions of Americans.

The three major credit bureaus announced Friday that a major overhaul of how medical debt appears on credit reports is coming July 1, with additional changes planned for 2023.

“These joint actions will remove nearly 70% of commercial medical debt collection lines from consumer credit reports, a milestone achieved after months of industry research,” the three offices said in a joint statement. statement.

Medical debt, resulting largely from unexpected health emergencies, plagues many Americans. Unpaid bills often go to collections and then show up on credit reports, ultimately preventing people from accessing credit, housing, and even jobs.

The first set of changes – and perhaps the most impactful – will take effect in July: paid medical debts will no longer appear on consumers’ bills. credit reports. Additionally, unpaid medical debt will only appear on credit reports after 12 months, up from the current six-month period. The bureaus say this will give consumers more time to negotiate with insurance and healthcare providers.

In the first half of 2023, Equifax, Experian and TransUnion are also announcing that they will remove medical collection debts of $500 or less from credit reports.

Government crackdown prompts action

The move by the three major credit reporting companies follows increased scrutiny from the Consumer Financial Protection Bureau (CFPB), a federal watchdog agency.

According to a CFPB report released earlier this month, $88 billion in medical debt currently taints the credit reports of approximately 43 million Americans. The CFPB also says consumers have filed more complaints with the agency about credit report errors than any other consumer-related issue.

“Medical bills are the most common debt in collections reported on our credit reports,” CFPB Director Rohit Chopra said in a statement.

“Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe,” he added.

According to the CFPB, unpaid medical debts disproportionately affect black and Hispanic communities, and COVID-19 has only exacerbated the situation due to substantial treatment costs – especially for hospitalizations.

“Having a medical debt collection mark on a credit report can make it harder to get credit, rent or buy a home, or find a job,” Chopra said.

According to the Federal Trade Commission (FTC), which compiles consumer complaints from the CFPB, the Department of Justice and dozens of other public and private organizations, consumers have filed nearly 600,000 complaints specifically about problems with their reports. credit in 2021 – just after complaints about scammer related fraud.

Consumers submit credit complaints for a host of reasons, such as incorrect information appearing on credit reports, inadequate telephone support from credit bureaus, and bureaus’ inability to investigate disputed information..

The Wall Street Journal reports that the three major credit bureaus are under investigation by the CFPB into how they have handled these credit disputes and that these recently announced rule changes are an attempt to appease the federal agency of surveillance.

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