The three major credit reporting agencies announced today that they are making changes to how medical debts are reported, leading to the removal of nearly 70% of medical debt tradelines from consumers’ credit reports.
Starting July 1, any paid medical collection debt will no longer appear on a consumer’s credit report. As well, the credit bureaus have extended the period of time before an unpaid medical can be reported to one year, from six months currently. Finally, starting next year, the credit bureaus will not include any unpaid medical debt less than $500 on consumers’ credit reports.
“Medical collections debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing,” said Mark W. Begor, CEO Equifax; Brian Cassin, CEO Experian; and Chris Cartwright, CEO TransUnion, in a statement. “As an industry we remain committed to helping drive fair and affordable access to credit for all consumers.”
The move appears to be a proactive attempt by the three major credit bureaus to preempt regulatory or enforcement action by regulators about medical debt and credit reporting. A number of reports released by the Consumer Financial Protection Bureau and the Kaiser Family Foundation have highlighted concerns about medical debts and the impacts they might be having on consumers’ credit reports. The CFPB has vowed to take action against what it termed “questionable” medical bills.
The CFPB estimated that 43 million consumers in the United States had a medical debt tradeline on their credit report, with a total amount of debt outstanding of $88 billion. In announcing its concern, the CFPB said it’s first step would be to hold credit reporting companies “accountable” while also “determining whether unpaid medical debts should be included in credit reports.”
EDITOR’S NOTE: Click here to sign up for a webinar on Monday, March 21 at 3pm ET featuring Rozanne Andersen, John Bedard, Leslie Bender, and Joann Needleman who will be discussing “What do the Changes in Medical Debt Credit Reporting Mean for the ARM Industry?”
