Last year we posted about changes coming to how medical collections will be reported on your credit reports.
The top three credit bureaus; Experian, Transunion, and Equifax, have reached an agreement to remove the following medical collections from credit reports:
- Medical collections that are paid
- Medical collections that are less than $500
- 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 did the changes take effect?
The changes were rolled out in two phases.
Starting July 1, 2022, all paid medical collections were removed from consumer credit reports and the time period increased to a year before medical collections can be reported on consumers’ credit reports.
And now, finally, the second part kicked in as well. As of April 11, 2023, medical collections under $500 were removed from credit reports.
Going forward, will medical collections be reported on credit reports?
Medical collections under $500 will no longer be reported on credit reports.
And as mentioned above, even medical collections of over $500 will not be reported until they are a year passed due.
And even after a year, if they are paid then they will be removed from your credit report.
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 2022, 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 that 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 believe this will also cause a lot of headache for medical collectors from collecting medical debt, going forward (especially bills under $500).
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