Medical debt to be excluded from millions of credit report
Medical debt to be excluded from millions of credit report
The three credit bureaus, Equifax, Experian, and TransUnion, announced that millions of U.S. consumers will soon have their medical debt wiped from their credit reports.
?
Beginning July 1, 2022, paid medical debt will no longer be included on credit reports, even if the debt has been on a report for several years.?
?
These changes may help those who have dealt with the burden of unexpected medical bills to rebuild their credit.?
?
In addition, the three bureaus are increasing the amount of time before medical debt in collections appears on consumer’s credit reports. The current timeline of six months will be lengthened to one year. The extended timeline gives consumers the opportunity to negotiate with providers or collectors to find a mutually-beneficial payment solution.?
?
Finally, beginning in the first half of 2023, the three agencies will no longer include any medical debt in collections under $500 on credit reports.?
?
It’s important to note that paid medical debt is different from medical debt in collections. Medical debt in collections has been turned over to a debt collector by the health provider. Collections accounts can negatively affect someone’s credit score for seven years. Even if the bill has been paid in-full, paid medical debts could continue to remain and affect credit scores.?
?
The Department of Veterans Affairs has also recently announced that it is adopting new standards for communicating on outstanding medical bills to consumer reporting companies. The Consumer Financial Protection Bureau (CFPB) called the new standards “a clear and important precedent for the healthcare industry.”
?
The weight of medical debt for consumers?
According to a Kaiser Family Foundation report released in March, nearly one in 10 adults, or approximately 23 million Americans, owe at least $250 in medical debt.
?
The CFPB says that 43 million Americans have approximately $88 billion worth of medical debts on their credit reports, and that medical debt accounts for 58 percent of bills in collections.
?
Errors in medical billing make matters worse, as medical bills frequently include coding errors, which could result in a patient’s financial responsibility being far larger than expected.
?
Accounts in collections can dramatically decrease someone’s credit score, making it harder to gain new credit, including auto loans, credit cards, and personal loans, with reasonable interest rates.
?
To be clear, these changes do not erase medical debt. Medical debt is being treated differently by the credit bureaus, but consumers are still responsible for paying it off.
?
The bottom line
The new standards for assessing medical debt should lift tens of millions of Americans’ credit scores. Consumers are recommended to check their credit reports regularly for accuracy. Make a note to check your credit report shortly after July 1, 2022 if you think you will be affected by the upcoming changes.
?
?
Mike Curran
NMLS# 624081
Loan Consultant
?
(973) 867-6193 office
(973) 801-2270 cell
(833) 351-2861 fax
?
[email protected]
https://www.loanDepot.com/mcurran
?
65 Madison Avenue
Suite 210
Morristown, New Jersey 07960
?
State Licensing : NJ | PA LIC# 83074
Customer service is our top priority: If you are not receiving exceptional customer service, or if you have any questions, please feel free to contact my manager Phil Iossa at (973) 867-6174 or at [email protected].
Confidentiality Note: This email and any attachment(s) are for the sole use of the intended recipient(s) and may be confidential and/or privileged. Any unauthorized use, disclosure or copying is strictly prohibited and may be unlawful. If you have received this communication in error, please immediately notify the sender by return email, and delete the message.
Please consider the environment before printing this email.s