Update: Effective April 11, medical collections under $500 were removed from credit reports
The top three credit bureaus; Experian, Transunion, and Equifax, have reached an agreement to change some key policies regarding which medical collections can be reported on consumer’s credit reports. The new policy will result in the removal of most medical collections from consumer credit reports.
Here are the details
- Medical collections that are paid will be removed from a consumer’s credit reports
- Medical collections that are less than $500 will no longer be reported, or will be removed from consumer credit reports
- Medical collections that are less than one year old will not be allowed to be reported on a consumer’s credit report (until they are at least a year old)
When will the changes take effect?
The changes will be rolled out in two phases.
Starting July 1, 2022, paid medical collections will be removed from consumer credit reports and the time period will increase to a year before medical collections can be reported on consumers’ credit reports.
Starting in the beginning of 2023, medical collections under $500 will no longer be reported on a consumer’s credit reports.
Why did the credit bureaus decide to make these changes?
The Consumer Financial Protection Bureau (CFPB), is a government agency which supervises the credit bureaus. In a report released in March, the CFPB stated that it planned to “hold credit reporting agencies accountable” for inaccurate medical debt on consumer credit reports. It looks like the credit bureaus got scared and decided to take action quickly before they would be smacked with some heavy penalties from the CFPB.
What does this mean to you?
Medical debt is a big factor which holds back many consumers from getting approved for loans. The most powerful threat medical debt collectors have is their ability to report it on the consumer’s credit report. With these new changes, any medical collection of less than $500 will no longer be allowed to be reported. Medical collections of $500 or more will only be able to report past year one, and only as long as they are unpaid. This will save many consumers from having their score affected by medical collections. I also believe this will also cause a lot of headache for medical collectors from collecting medical debt, going forward (especially bills under $500).
If medical bills are not paid, and it gets reported, can I pay it off and have it removed from credit score?