Many Americans Will Soon Get Medical Debt Removed from Their Credit Reports
Starting in July 2022, many Americans may see their medical debt removed from their credit reports, according to a statement from Equifax, Experian, and TransUnion.
Accordingly, any medical debt that was sent to collections but has been paid will be wiped from people’s credit reports. A few other changes will also be implemented to help people improve their credit scores.
Medical Debt in the US
According to a Kaiser Family Foundation report, approximately 23 million Americans have significant medical debt. Data from the Consumer Financial Protection Bureau shows 43 million people had a total of $88 billion worth of medical bills on their credit reports in June 2021. The pandemic only worsened the situation as more people were left without jobs even as their living and medical costs increased.
At the end of March, the three major credit bureaus stated that as much as 70% of medical debt would be removed from Americans’ credit reports, providing relief for millions. The problem has been that debts sent to collections, even after they are paid, continue to have long-term negative financial consequences. Since they remain as a red mark on people’s credit reports, records of these debts can make it difficult to obtain financing or increase the cost of financing.
The changes that will be enacted on July 1 state that:
- Any medical debt in collections that has been paid off will no longer be included in credit reports
- Unpaid medical debt that is in collections will only be reported after one year instead of six months
- Any medical debt in collections under $500 will no longer be included in credit reports starting in 2023.
As a result of these changes, many Americans are likely to see positive changes in their credit scores. However, remember that this doesn’t mean medical debt will be a thing of the past, nor does it mean that all medical debt will be erased.
Does It Apply to Me?
f you had any medical debt in collections which has been paid off, it should be removed from your credit score. However, you should be proactive and check your credit report.
After July 1, you’ll want to get a copy of your credit report and check to see that your paid medical debt has been eliminated. Thanks to the pandemic, until the end of the year, you can get one credit report for free every week from each of the three main credit reporting bureaus.
It’s important to check your credit report from time to time anyway because mistakes can happen. A Federal Trade Commission study conducted in 2012 discovered that 25% of Americans had errors in their credit reports.
If you do find medical debt that should have been removed, file a dispute with each of the three organizations to get it eliminated. Also, you should file a dispute with the company that provided the bureaus with the information, which in most cases will be the debt collector.
If you did pay off debt that still shows up as unpaid, make sure to include documents proving you paid it. File your dispute with the credit reporting companies and the debt collector.
Also, don’t be concerned if your dispute is rejected at first. This often happens, especially if there are internal discrepancies or poor communications within the organization that issued the medical charges. You may need to file a dispute a few times to get a positive result.
Is No-Exam Life Insurance Right for You?
Why Stay-At-Home Parents Need Life Insurance
Many Americans Will Soon Get Medical Debt Removed from Their Credit Reports
Medicare Now Covers Up to Eight At-Home Covid Tests
The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2205 The Insurance 411. www.theinsurance411.com Tel. 877-762-7877.