Credit reporting agencies will destroy most medical debts Business

Three of the country’s largest credit reporting agencies are removing nearly 70% of medical debt from consumer credit reports, the companies said in a joint statement on Friday.

Equifax, Experian and TransUnion are eliminating billions of dollars from consumer bills that have faced unexpected medical bills that they have been unable to pay. Three firms said they took the step after months of research.

“Medical arrears are often caused by unforeseen medical circumstances. These changes are another step we are taking together to help people across the United States focus on their financial and personal well-being,” the joint statement said. companies.

The announcement follows a study by the Bureau of Financial Protection for Consumers, which shows that Americans have accumulated $ 88 billion in medical debt on consumer loans as of June 2021. This is the most common loan account for debt collection in credit records, according to the CFPB.

Medical debt can be volatile and unpredictable and can negatively affect many financially secure consumers. Blacks, Hispanics, young consumers and low-income consumers are more likely to be exposed to medical debt, the bureau said.

Concerns about medical debt have intensified after the Covid-19 pandemic hospitalized millions of people, and CFBP Director Rohit Chopra has publicly criticized the collection of medical debts by credit reporting agencies. On March 1, Chopra said the CFPD would “scrutinize” the Big Three credit reporting agency.

“We expect them to take seriously their role as key players in the credit reporting system – a system whose integrity and accuracy can determine the financial future of hundreds of millions of people,” Chopra said.

From July 1, paid medical debt will no longer be included in the report on consumer loans. Millions of Americans previously had a downgraded credit score because debts paid after being sent to a collection could appear on credit reports for seven years.

More changes are expected. Now the consumer report will show unpaid arrears on medical fees, rather than six months as before.

The three companies also said that starting in the first half of 2023, medical debt arrears of less than $ 500 will no longer be included in credit reports.

Back to top button