Why 70% of Medical Debt Will Soon Disappear From Credit Reports

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If you’re among the millions of Americans grappling with medical bills, obtaining a mortgage or car loan will soon get easier.

The three major credit bureaus — Equifax, Experian and Transunion — recently announced sweeping changes to how medical debt will appear on credit reports. The overhaul will erase about 70% of medical debt from consumers’ credit histories. Here’s what’s changing:

  • Beginning July 1, 2022, medical bills that were sent to collections but have since been paid off will no longer appear on credit reports.
  • Unpaid medical debt that’s in collections won’t appear on your credit reports for 12 months, giving consumers more time to work with creditors and insurers before their credit is impacted. Under the current rules, medical collections debt appears on credit reports after six months.
  • During the first half of 2023, medical bills of $500 or less that are in collections will be removed from credit reports.

One reason for the changes: Medical debt isn’t a good predictor of whether you’ll be able to repay other types of debt. Most medical debt is the result of a one-time or short-term expense, rather than ongoing spending habits . Because it’s difficult to price shop when you’re facing a health emergency and insurance coverage varies widely, medical bills are unpredictable for consumers.

How Changes to Medical Debt Reporting Affect You

Your credit score affects many facets of life, including whether you can get a mortgage, loan or credit card, along with how much interest you pay. Your payment history is the most important credit score factor, accounting for 35% of your score. Negative information, like a late payment or an account that’s sent to collections, typically stays on your credit report for seven years.

Unlike your bank or credit card company, doctor’s offices and hospitals usually don’t report payment history to the credit bureaus. They only notify the bureaus of medical debt once they’ve…

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