Here’s a shocker … removing medical debt tradelines from consumers’ credit reports has led to fewer consumers having medical debts on their credit reports and improved the credit scores of individuals who used to have medical debts on their credit reports, according to a published report. Who could have seen that coming? 😲
By The Numbers: During the past year, the number of consumers with medical debt items on their credit reports has decreased to about 5%, as of August 2023, from 16% in August 2018 and 11.6% when the credit bureaus started making changes to how they reported healthcare debts in August 2022, according to data published by the Urban Institute. During the past year, the average Vantage Score for individuals who had medical debts on their credit reports but don’t anymore has increased to 615 from 585. Fort individuals without medical debts on their credit reports, the average Vantage Score dropped to 711 from 712 last August.
What This Means: This will fuel the fire of advocacy organizations and regulators who believe that medical debt is a poor indicator of a consumer’s creditworthiness, even though the only cited report is nearly a decade old and is based on data from 2009. While consumers who know have a higher credit score may get more access to credit, that doesn’t mean they will be able to manage it properly. Sure, there are consumers whose credit scores fall because of situations like job loss and divorce, but that’s not why all consumers with low credit scores are in that situation.
Learn more.
