The top three credit-reporting agencies announced big changes are coming to the way medical debt is reported.
Equifax, TransUnion and Experian said they will drop paid medical debt on reports starting on July 1, 2022. Until now, it has stuck around for up to 7 years.
Jon Penn is a Certified Financial Planner at RIA Advisors in Houston.
“Sometimes no matter how great you might be with putting together a budget and watching your expenses, sometimes life just throws you a curveball and all of a sudden you have an unexpected medical bill,” said Penn.
Americans have as much as $140 billion in medical debt. These changes could wipe out 70 percent of it.
This comes after criticism from the Consumer Financial Protection Bureau about medical debt errors showing up on credit reports.
There are other changes that will take effect in 2023:
- New unpaid medical debt won’t appear on credit reports for a year instead of 6 months.
- Unpaid medical bills in collections won’t show up at all if it’s under $500.