Some upcoming changes to medical debt reporting on credit reports will benefit a lot of American healthcare consumers in the near future. Currently, when unpaid medical bills—a problem affecting millions of Americans—get sent to a collections agency, this medical debt goes on your credit report. It stays there for up to 7 years, even if you pay it off. And this has a significant negative affect on your credit score, which in turn can make your life much more difficult—and expensive.
The following three changes to medical debt reporting on credit reports will soon provide relief.
Removing Paid Collections Accounts from Credit Reports
Again, under the current system, medical debt that went to collections stays on your credit report for up to 7 years even after you pay it off. But the three credit-reporting bureaus—TransUnion, Equifax, and Experian—have all said that as of July 1, 2022, their credit reports will no longer show medical debt in collections after it’s paid off. Once it takes effect, this will instantly trigger a friendlier credit history and higher credit score for so many Americans. And it will remove about 70% of medical debt from consumers’ credit reports.
Establishing a Minimum Medical Debt for Reporting
Also under the current system, any amount of unpaid medical debt that gets sent to collections will appear on your credit report. And even a small bill in collections has a significant negative effect on your credit score. But, beginning some time in the first half of 2023, the three credit bureaus will no longer include medical debts under $500 on their credit reports. This will be especially beneficial to the most financially insecure Americans who are unable to pay even relatively low medical expenses.
Extending the Grace Period for Medical Debt Reporting
Currently, unpaid medical bills can be reported on credit reports after 6 months of being sent to collections. This grace period will soon be extended to 1 year. That means people get an additional 6 months to pay off their medical debt or to work out a payment plan with their healthcare provider or the collections agency that takes over the debt before it becomes a negative factor on their credit report.
More Information Beyond These Changes to Medical Debt Reporting on Credit Reports
- Read about how to raise your credit score.
- Read about three strategies for paying off credit card debt—another factor that can significantly hurt your credit score.