BREAKING NEWS! Major Changes in Credit Reporting of Medical Debt

TL;DR

Credit reporting agencies TransUnion, Equifax, and Experian will make significant changes to how they handle medical debt and collections on credit reports, including automatic deletion of paid medical bills and an increase in the time before unpaid medical bills can be reported.

Transcript

hey everybody john skiba here from the consumer warrior youtube channel and today we have some breaking news uh from the big three credit reporting agencies transunion equifax experian uh released a statement today jointly on how they're going to deal with medical debt and medical collections on your credit report in the very near future but if thi... Read More

Key Insights

• 💳 The Consumer Financial Protection Bureau played a significant role in pressuring credit reporting agencies to change how they handle medical debt on credit reports.
• 💳 Medical debt is the number one debt issue in the United States, surpassing credit card debt.
• 😷 The new changes aim to simplify the handling of medical bills and collections, reduce confusion caused by insurance coverage, and provide relief to individuals dealing with medical issues.
• 😷 Automatic deletion of paid medical bills will incentivize individuals to settle their debts promptly.
• 😷 The increase in the time before unpaid medical bills can be reported acknowledges the complexity of medical billing and the need for more time to resolve disputes.
• 😷 Dropping medical collections under $500 from credit reports starting in 2023 will prevent minor medical bills from impacting credit scores.
• 👻 The changes align with efforts to support individuals during the COVID-19 pandemic and allow them to prioritize their health without worrying about credit score repercussions.

Questions & Answers

Q: What prompted the credit reporting agencies to make changes to medical debt reporting?

The Consumer Financial Protection Bureau pressured the agencies to address the handling of medical debt on credit reports, considering it the top debt issue in the United States.

Q: When will the changes to medical debt reporting go into effect?

The first two changes will take effect on July 1, 2022, while the third change will begin on January 1, 2023.

Q: How will the changes impact individuals with medical collections on their credit reports?

Once a medical bill or collection is paid, it will be automatically deleted from the credit report, providing a boost to the individual's credit score. Additionally, the time before unpaid medical bills can appear on a credit report will increase to 12 months, allowing more time for resolution.

Q: Why will medical collections with disputed amounts under $500 be dropped from credit reports?

To alleviate the impact of minor medical bills, credit bureaus will remove any collections with amounts in dispute under $500 from credit reports, ensuring they do not negatively affect credit scores.

Summary & Key Takeaways

• TransUnion, Equifax, and Experian jointly released a statement on changing their approach to medical debt and collections on credit reports.

• The changes include automatic deletion of medical bills once paid, an increase in the time before unpaid medical bills can be reported, and dropping medical collections with disputed amounts under $500.

• These changes aim to address the complexities and impact of medical debt on credit scores and provide relief to individuals dealing with medical issues.