Equifax, Experian, and TransUnion have jointly announced that any medical debt collection with an initial balance under $500 has been removed from US consumer credit reports. The three credit bureaus wiped out almost 70% of the total medical debt collection tradelines reported to the Nationwide Credit Reporting Agencies (NCRAs) in light of the change. Medical debt affects over one in seven US adults and can lead to serious health consequences and financial challenges, including damage to credit scores. This change aims to support greater and more responsible access to credit and mainstream financial services for consumers.
The three major credit bureaus in the United States, Equifax, Experian, and TransUnion, have announced that they will be removing any medical debt collections with an initially reported balance of under $500 from consumer credit reports. The joint announcement has brought welcome news to the many Americans who struggle to pay for healthcare, and for whom medical debt can cause significant financial and personal challenges.
The credit bureaus have removed almost 70% of total medical debt collection tradelines that have been reported to the Nationwide Credit Reporting Agencies (NCRAs) as a result of this change. According to the CEOs of Equifax, Experian, and TransUnion, the removal of medical collection debt with an initially reported balance of under $500 from consumer credit reports will have a positive impact on people’s personal and financial well-being. The CEOs believe that this change will lead to greater and more responsible access to credit and mainstream financial services for consumers.
Medical debt is a significant problem for many Americans. An Urban Institute report published last month found that past-due medical debt affects over one in seven adults in the US. Furthermore, nearly two-thirds of adults affected by past-due medical debt have incomes below 250 percent of the federal poverty line. Despite insurance coverage, most adults under the age of 65 have experienced medical debt, which can lead to serious health consequences and financial challenges, such as depleted savings, going without household essentials, and damage to credit scores.
A study published in the American Journal of Public Health in 2019 found that medical expenses contributed to the majority of bankruptcy filings. Since then, consumers have had to deal with the health and financial repercussions of the COVID-19 pandemic, as well as recent inflation and economic uncertainty.
Last year, the NCRAs committed to supporting consumers with medical debt collection reporting changes. The group stated that these changes would “help people to focus on their wellbeing and recovery.” Equifax, Experian, and TransUnion have expanded the time before unpaid medical debt collection appears on a customer’s credit record from six months to one year, in addition to removing all medical debt collection that has been paid by the consumer from consumer credit reports. This change aims to give consumers more time to address their debt before it is reported on their credit file.
The joint announcement from the three major credit bureaus is a significant step toward addressing the issue of medical debt in the United States. The removal of medical debt collections with an initially reported balance of under $500 from consumer credit reports will undoubtedly help many Americans to access credit and financial services more easily and to focus on their wellbeing and recovery.
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