A medical worker walks past a row of ambulances parked outside Houston Methodist Hospital amid the global outbreak of the coronavirus disease (COVID-19). in Houston, Texas, USA, June 22, 2020.

Callaghan O’Hare | Reuters

Many U.S. consumers will have their medical debt erased from their credit reports, the nation’s largest credit reporting agencies announced Friday.

Equifax, Experian and TransUnion said in a joint statement that after months of market research, they would remove nearly 70% of medical collection bills from consumer credit reports. The changes will take effect this summer.

“After two years of the COVID-19 pandemic and a detailed breakdown of the prevalence of medical collection debt on credit reports, the NCRAs (National Credit Reporting Agencies) are making changes to help people focus on their personal well-being and recovery,” the statement said. report. companies said.

From July 1, medical debts sent to collection agencies and eventually paid off will no longer be included in consumer credit reports. In the past, debts paid after being sent to collections could be listed on credit reports for seven years. Consumers also now have a year before unpaid medical collection debts appear on credit reports after being sent to collections. That’s more than the current six months, which the agencies say will give people more time to work with their insurance or health care providers.

Beginning in the first half of 2023, Equifax, Experian and TransUnion will also stop recording medical debts below $500 on credit reports.

Medical debts, which can be extremely unpredictable, can cause even the most fiscally rigorous Americans to miss out on payments, which can result in lower credit scores that hinder their ability to get the best credit or loan rates.

A February report from the Consumer Financial Protection Bureau estimated that as of June 2021, there is $88 billion in medical debt on consumer credit records. Most medical debt collected based on consumer credit reports is less than $500, it added.

Black and Hispanic consumers, young adults and low-income people are all more likely to be in medical debt than the national average, the report said. Older adults and veterans are also “heavily affected” by the debt, it said.

This post Most medical debt is erased from consumer credit reports

was original published at “https://www.cnbc.com/2022/03/19/most-medical-debt-will-be-wiped-from-consumer-credit-reports.html”