Changing How Medical Debt is Reported

The credit bureaus are making a major change

Here’s something you don’t hear every day: The credit bureaus are helping your credit score. As Marketwatch reports, Equifax, Experian and TransUnion are dropping fully-paid medical debts from reports and changing how unpaid medical debt is reported.

This big change will have the impact of removing about 70 percent of paid medical debts that have been reported on consumers’ reports. As for that unpaid medical debt, it will now take one year to appear on your report, instead of six months. The bureaus are also removing any unpaid medical debt collections that were for $500 or less.

These are positive changes for consumers. Having medical debt on your credit report can hurt your score, making it harder to secure loans or low-interest credit cards. Medical debt especially has been an issue for Americans’ credit. According to the CFPB, in 2021, Americans had about $88 billion in medical debt on their credit records, and a majority of that debt was for amounts under $500.

The changes to these items that will appear on your credit reports will almost certainly help your credit score. However, just how much your score improves is dependent on your overall credit. If you have several small dents in your report, the medical debt removal might help just a little. If the medical debt is one of only a couple of negative things bogging you down, your score will likely jump higher. The bottom line is that this move is pro-consumer, and that’s always a good thing.

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