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70% of Medical Expenses Won’t Hurt Credit Scores

Effective July 1, paid medical collection debt won’t be used for credit scores by the three main U.S. scorers, and unpaid debt won’t appear for a full year.

CHICAGO – The nation’s three main credit reporting agencies (NCRAs) – Equifax, Experian  and TransUnion – announced significant changes to medical collection debt reporting.

In a joint statement, the companies said they would support consumers faced with unexpected medical bills by removing nearly 70% of medical collection debt tradelines from their consumer credit reports. The change follows months of industry research. According to the Kaiser Family Foundation, two out of three medical debts result from a one-time or short-term expense from an acute medical need.

For some consumers with medical debt problems, it means a higher credit score. That will not only qualify some of them for home buying, it will likely save them money on all credit products, including the amount they pay on credit cards.

Effective July 1, 2022, paid medical collection debt won’t be included on consumer credit reports – and the time period before unpaid medical collection debt appears on a consumer’s report will increase from six months to one year. The extra time is to give “consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.”

Starting in the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.

“Medical collections debt often arises from unforeseen medical circumstances,” Equifax, Experian and TransUnion CEOs said in a joint statement announcing the change. “These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing. As an industry we remain committed to helping drive fair and affordable access to credit for all consumers.”

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